Assume Oakley, Inc.-the maker of sunglasses, goggles, and other products-made merchandise costing $137,200 and sold it...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Assume Oakley, Inc.-the maker of sunglasses, goggles, and other products-made merchandise costing $137,200 and sold it on credit to Sunglass Hut for $405,000 with terms 2/10, n/30. Some of the merchandise differed from what Sunglass Hut had ordered, so Oakley agreed to give an allowance of $5,000. Sunglass Hut satisfied the remaining balance (of $400,000) by paying within the discount period. I Required: 1. Assuming that Oakley uses a perpetual inventory system, analyze the accounting equation effects and record the journal entries that Oakley would use for the following transactions: a. Sale from Oakley to Sunglass Hut b. Allowance granted to Oakley c. Payment made by Sunglass Hut to Oakley 2. Compute Oakley's net sales, assuming that sales returns and allowances and sales discounts are treated as contra-revenues. 3. Compute Oakley's gross profit and gross profit percentage on the sale. Compare this ratio to the 66.5 percent gross profit percentage earned by the Luxottica Group-the Italian company that makes Killer Loop and Ray-Ban sunglasses, which are sold through its Sunglass Hut stores. What does it imply about the two companies? Assume Oakley, Inc.-the maker of sunglasses, goggles, and other products-made merchandise costing $137,200 and sold it on credit to Sunglass Hut for $405,000 with terms 2/10, n/30. Some of the merchandise differed from what Sunglass Hut had ordered, so Oakley agreed to give an allowance of $5,000. Sunglass Hut satisfied the remaining balance (of $400,000) by paying within the discount period. I Required: 1. Assuming that Oakley uses a perpetual inventory system, analyze the accounting equation effects and record the journal entries that Oakley would use for the following transactions: a. Sale from Oakley to Sunglass Hut b. Allowance granted to Oakley c. Payment made by Sunglass Hut to Oakley 2. Compute Oakley's net sales, assuming that sales returns and allowances and sales discounts are treated as contra-revenues. 3. Compute Oakley's gross profit and gross profit percentage on the sale. Compare this ratio to the 66.5 percent gross profit percentage earned by the Luxottica Group-the Italian company that makes Killer Loop and Ray-Ban sunglasses, which are sold through its Sunglass Hut stores. What does it imply about the two companies?
Expert Answer:
Answer rating: 100% (QA)
1a Sale from Oakley to Sunglass Hut Dr Accounts Receivable Sunglass Hut 405000 Cr Sales Revenue ... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
We will be working with a company called Global Bike Inc., (GBI). Information regarding GBI follows. Company History Global Bike Inc. has a pragmatic design philosophy that comes from its deep roots...
-
Solow model revisited. Consider the following version of the Solow model: Production function: Yt =A[Kta +Na]1/a Capital evolution: Kt+1 =(1-3)Kt +It Investment: It = syt Assume that the growth of...
-
What is the atomic weight of a hypothetical element consisting of two isotopes, one with mass= 64.23 amu (36.00%), and one with mass=65.32 amu ( 64.00%) ? [Topic: isotope and molecular weight] 64.93...
-
Refer to the Process Safety Progress (December 2004) study of 83 industrial accidents caused by management system failures, Exercise 2.150. A summary of the root causes of these 83 incidents is...
-
This two week case will use the following two year financial statements including the balance sheets and profit and loss statements for South Bridge Industries. Additional data will be given for 2022...
-
Plaintiff contracted to install a boiler for defendant. After plaintiff had installed and tested the boiler, but before final payment to plaintiff had been made, defendant took custody of the boiler...
-
Support-department cost allocations; single-department cost pools; direct step-down, and reciprocal methods. The Manes Company has two products. Product 1 is manufactured entirely in Department X....
-
Briefly explain the differences between a stand alone query language, embedded query language and a data manipulation language.
-
A corporation is considering a capital project for the coming year. Source of Capital Proportion Aftertax cost __________________________________________________ Longterm debt .40 10 % Preferred...
-
The Fair Debt Collection Practices Act applies to anyone who attempts to collect a debt. (True/False)
-
How can research performance be measured?
-
To be negotiable, an instrument must include an unconditional promise to pay. (True/False)
-
Are only unconditional promises or orders negotiable? If yes, why? If no, why not?
-
Rich Foods Company advertises that its cereal, Fiber Rich, reduces cholesterol. After an investigation and a hearing, the FTC finds no evidence to support the claim. To correct the publics impression...
-
Describe the roles of psychological factors in criminal behavior. Among these factors, which one has more contribution in recently occurring rape incidents? Suggest your recommendations for reducing...
-
Determine which of the following limits exist. Compute the limits that exist. lim x-0 1- + 3x X
-
Why do customers expect more choice and flexibility as to how products and services are made available to them?
-
Push type promotions are not limited to the supermarket or the Chevrolet dealer. Some manufacturers of highbrow products also do their share of push promotion. For instance, Steinway & Sons, the...
-
Explain the difference between indirect exporting and direct exporting.
-
The financial records of Dunbar Inc. were destroyed by fire at the end of 2015. Fortunately, the controller had kept the following statistical data related to the income statement. 1. The beginning...
-
Maher Inc. reported income before income tax during 2015 of 790,000. Additional transactions occurring in 2015 but not considered in the 790,000 are as follows. 1. The corporation experienced an...
-
Presented below is the trial balance of Thompson Corporation at December 31, 2015. Instructions Prepare an income statement and a retained earnings statement. Assume that the only changes in retained...
Study smarter with the SolutionInn App