A company with $50,000 debt and $80,000 equity seeks to finance growth without increasing debt-to-equity ratio or issuing new stock. With a net income of $13,000 and a 40% dividend payout ratio, the company can use its retained earnings of $7,800 as the maximum amount of new debt for growth without altering the debt-to-equity ratio.
To determine how much new debt the company can use to finance its growth without increasing the debt-to-equity ratio, we need to calculate the maximum sustainable growth rate (SGR) using the given information.
The SGR represents the growth rate a company can achieve without altering its capital structure. It is calculated as the product of the retention ratio (1 - dividend payout ratio) and the return on equity (ROE).
Given that the dividend payout ratio is 40% and the SGR is 10.80%, we can calculate the ROE as follows:
SGR = (1 - dividend payout ratio) * ROE
10.80% = (1 - 40%) * ROE
10.80% = 60% * ROE
ROE = 10.80% / 60%
ROE = 0.18 or 18%
Next, we can calculate the earnings retained by the company, which is the net income multiplied by the retention ratio:
Retained Earnings = Net Income * (1 - dividend payout ratio)
Retained Earnings = $13,000 * (1 - 40%)
Retained Earnings = $13,000 * 60%
Retained Earnings = $7,800
To maintain the current debt-to-equity ratio, the company can use the retained earnings to finance growth. Since equity is $80,000, the maximum new debt that can be used is equal to the retained earnings:
Maximum New Debt = Retained Earnings
Maximum New Debt = $7,800
Therefore, the company can use up to $7,800 in new debt to finance its growth without issuing new equity or increasing the debt-to-equity ratio.
To know more about equity ratio refer here:
https://brainly.com/question/28391877#
#SPJ11
Honda motor co. prices its whole line (from the $15,000 honda fit economy sedan to the $40,000 pilot suv) so that it offers high quality at reasonable prices. what pricing policy is honda usinG?
Value Pricing policy is honda using.
This is an example of " Value Pricing" since value pricing is based on the "Value" that the product creates in the minds of the customer.
Explanation of why others are not selected.
1. CUmulative quantity discount is offered for customers who purchase several items at once which is not the case
2. Bundle pricing is offred for the customer who purchases all the goods at once which is not the case.
3. Introductory pricing involves pricing low at the time of introducing a new model to gain market penetration which is also not the case
Value pricing is customer-oriented pricing. H. Companies set prices based on how much customers believe in the value of their products. Value-based pricing differs from "cost plus" pricing, which includes production costs in the price calculation.
Learn more about Value Pricing here: https://brainly.com/question/7459025
#SPJ4
Ethical standards in business are principles or codes for how a business conducts itself with ___, customers, and the public.
A. Other businesses
B.Employees
C.the government
D.charity organizations
Answer:
B. Employees
Explanation:
What are people with out a college education most likely to do
a project is resource leveled without resource-limited constraints and the project did not extend beyond its required completion after leveling. which of the following must have been false?A) The critical path of the project had negative slack.B) Tasks using the same resources that were leveled were not on the critical path.C) At least one of the activities using the resources that were leveled had positive slack.D) The project had adequate positive slack in all the paths to accommodate the leveling.
Leveling is a technique used in project management to ensure that resources are distributed evenly across tasks and that no one resource is overburdened while another remains idle. The false option must be either A, B, or C,
Given the scenario presented, where the project did not extend beyond its required completion after leveling, we can deduce that the resource leveling was successful. Therefore, one of the options provided must be false.
Option A suggests that the critical path of the project had negative slack, which means that the project would not be completed on time even if all resources were available. This scenario is unlikely since the project was completed within the required time after leveling.
Option B suggests that tasks using the same resources that were leveled were not on the critical path. This could be true, but it does not necessarily mean that the project would not be completed on time after leveling.
Option C suggests that at least one of the activities using the resources that were leveled had positive slack. This could also be true, but it does not necessarily mean that the project would not be completed on time after leveling.
Option D suggests that the project had adequate positive slack in all paths to accommodate leveling. This could be false since the project may not have had adequate positive slack in all paths, but it still would not have extended beyond its required completion after leveling.
Therefore, the false option must be either A, B, or C, but we cannot determine which one from the information provided.
Know more about the the Leveling
https://brainly.com/question/30952219
#SPJ11
Suppose that the public holds 50% of the money supply in currency, that the reserve requirement is 20%, and that banks hold no excess reserves. If a customer deposits $6,000 in her checking account, required reserves will increase by:
The required reserves will be increased by $4,800 if the customer deposits the amount of $6,000.
What is meant by deposits?
Deposits are the amount that the customers put in their savings accounts opened with the banks.
Given values:
Deposited amount: $6,000
Reserve ratio: 20%
Computation of increase in required reserves:
\(\rm\ Increase \rm\ in \rm\ Required \rm\ Reserves=\rm\ Customer \rm\ deposits \times\ (100\%-\rm\ Reserve \rm\ Ratio)\\\rm\ Increase \rm\ in \rm\ Required \rm\ Reserves=\$6,000 \times\ (100\%-20\%)\\\rm\ Increase \rm\ in \rm\ Required \rm\ Reserves=\$4,800\)
Therefore, the amount of $4,800 will increase the required reserves on the deposit of $6,000 by the customer.
Learn more about the deposits in the related link:
https://brainly.com/question/14303353
#SPJ1
. suppose the bank of tazi loaned the banks of tazi 10 million tazes. suppose also that both the reserve requirement and thepercentage of deposits held as excess reserves stay the same. byhow much would the money supply change?
To determine the change in the money supply, we need to consider the reserve requirement and the percentage of deposits held as excess reserves.
1. Reserve requirement: This refers to the percentage of deposits that banks are required to hold as reserves. If the reserve requirement remains the same, it means that the banks will still have to keep a certain portion of the loaned 10 million tazes as reserves and cannot lend it out.
2. Percentage of deposits held as excess reserves: Excess reserves are funds that banks keep above the required reserves. If the percentage of deposits held as excess reserves stays the same, it means that banks will still hold the same proportion of deposits as excess reserves and will not lend it out.
Given that both the reserve requirement and the percentage of deposits held as excess reserves stay the same, it means that the banks will not be able to lend out any of the loaned 10 million tazes. Therefore, the money supply will not change in this scenario.
To know more about money visit:
https://brainly.com/question/2696748
#SPJ11
we have seen that over long periods, stock investments have tended to substantially outperform bond investments. however, it is not at all uncommon to observe investors with long horizons holding their investments entirely in bonds. are such investors irrational?
Some investors are extremely risk averse and prefer safer investments. That higher reward does not prevent them from taking on the additional risk.
Investment is the commitment of funds to the purchase of an asset with the goal of increasing its value over time. Investment necessitates the sacrifice of some current item, such as time, money, or effort. In finance, the goal of investing is to earn a return on the invested asset. The return may consist of a gain (profit) or loss realized through the sale of a property or investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income.
Investors often expect bigger profits from riskier assets. When a low-risk investment is made, the return is often poor. Similarly, high risk entails a significant possibility of loss.
Learn more about prevent here
https://brainly.com/question/14938514
#SPJ4
what would wages look like if there was no minimum wage?
Answer:
if changed now they'd probably stay the same
Explanation:
people aren't going to buy anything if they don't have enough money to even feed themselves so if wages were lowered, especially minimum wage, that would be pretty bad lol
When opening an account What are the 3 things you need to do?
You must decide on a bank and give it the required documentation, such as identification and proof of address, in order to opening an account.
Usually, in order to be eligible, you must be 18 years old. Finally, in order to avoid costs, you might need to fund the account or maintain a minimum level. You will require a government-issued ID, your ID number, and your physical and mailing addresses in order to open an account.
You should read the disclosures before choosing an account so that you are aware of any account fees or minimum balance requirements. Depending on the characteristics you need, such as high interest rates, low minimum balance requirements, no ATM fees, or something else, you can choose the bank or account you desire. You must provide the bank or credit union with paperwork when you open a new bank account so they can confirm your identity.
learn more about opening an account here:
brainly.com/question/28237627
Neil is developing his marketing strategy. Which of these is NOT a requirement Neil has to follow based on the Telephone Consumer Protection Act
The TCPA restricts the making of telemarketing calls and uses automatic telephone dialing systems and artificial or prerecorded voice messages.
So that it will cope with a growing wide variety of telephone advertising calls, Congress enacted 1991 the phone consumer safety Act (TCPA). The TCPA restricts the making of telemarketing calls and the use of automated telephone dialing structures and synthetic or prerecorded voice messages.
The TCPA restricts telemarketing calls made to: Any residential phone subscriber before the hour of eight a.m. or after nine p.m. (known as party's neighborhood time) A residential phone quantity on the country-wide do-now not-name registry.
Normally speaking, the TCPA prohibits the usage of an ATDS or prerecorded message to touch cellular telephones, and prerecorded telemarketing messages to contact residential phones, except the recipient has provided and now not revoked “consent” to acquire the call/text.
Learn more about TCPA here: https://brainly.com/question/26152499
#SPJ4
What is the difference between revenue and profit?
Answer:
Revenue is the total amount generated by the sales of goods or by services related to company's primary operations. However, profit is the amount of income left after accounting for all expenses, debts and etc.
Will give brainliest to anyone who can explain how to solve this
Find the amount of markup by subtracting the store cost from sale price:
25-5 = 20
Divide markup amount by cost:
20/5 = 4
Multiply by 100 to get percentage
4 x 100 = 400 %
The answer is B. 400%
Answer:
Explanation:
After-Before/Before = 25-5=20 / 5=4 = 400%B
When a movie trailer is released far in advance of the release of the movie itself, what marketing concept is
MOST likely being used?
push marketing
content
hype
buzz
Answer:
it's either hype or buzz
Answer: hype
Explanation:
Why would the inherent and control risks at Kid Castle be of concern to a potential auditor?
What taxes are paid directly to the government by taxpayers?.
Direct Taxes, as the name suggests, are unit taxes that are unit directly paid to the govt by the remunerator. it's a tax applied on people and organizations directly by the govt e.g. income tax, corporation tax, wealth tax etc.
Indirect Taxes are area units applied on the manufacture or sale of products and services. There are unit 2 forms of taxes particularly, direct taxes and indirect taxes. The implementation of each of the taxes differs. The intermediator later files a come back|income tax return|return|legal document|legal instrument|official document|instrument} and forwards the tax return to the government with the return.
Direct tax may be a tax that someone or an organization pays on to the entity that obligatory it. Examples embrace taxation, property tax, and private property tax.
To learn more about direct tax, visit here
https://brainly.com/question/10652477
#SPJ4
Disadvantages of choosing a job that is extremely popular or in demand
The disadvantage of choosing a job that is very popular or a job that is in high demand is that after a while such a job may become saturated or it would become monotonous.
What is a high demand job?This is the term that is used to refer to a job that the people that wpould employ labor are constantly in need of. Such a job is one that would require the people that have the qualification to opt in and get the places and the roles that they are to fill.
The issues that may arise from such a job that is in high demand is that after a period, such a job may have a lot of persons that would want to fulfil the role.
The number of qualified persons may become more than the job that is available for the people to do in the long run.
Hence this is a disadvantage. Therefore I would conclude by saying that the disadvantage of choosing a highly popular job is that the number of persons that are willing to fulfil the role may exceed the job overtime.
Read more on jobs here: https://brainly.com/question/26355886
#SPJ1
You are really hungry and have been wanting to eat pizza all day. Instead of ordering a medium, you order a large. However, after about 4 slices, you don’t want anymore. This is an example of which factor?
Responses
diminishing personal value
diminishing personal value
substitutes
substitutes
buying power
buying power
diminishing marginal utility
The fact that you ordered a large pizza but after 4 slices, don't want anymore is an example of diminishing marginal utility.
What is diminishing marginal utility?Diminishing marginal utility refers to an economic principle that talks about how the utility or satisfaction that a person gets from each additional unit of an item increases at first, and then decreases.
For instance, the person was really hungry and then ordered a large pizza to be satisfied. But as they ate more slices, they were satisfied less and less and eventually ended up wanting no more slices of pizza.
In conclusion, this is diminishing marginal utility.
Find out more on diminishing marginal utility at https://brainly.com/question/15242967
#SPJ1
If an underwriter overestimates the demand for a firm's securities in a firm commitment offering,the underwriter can
A. sell the shares back to the issuing firm at a discount.
B. lower the bid price to the issuing firm.
C. increase the fees charged to the issuing firm.
D. cancel the issue and refund the fees paid by the issuing firm.
E. none of the above
Option D. If an underwriter overestimates the demand for a firm's securities in a firm commitment offering, they can cancel the issue and refund the fees paid by the issuing firm.
This means that the underwriter will not be able to sell the securities at the price they had anticipated and therefore cannot fulfill their commitment to the issuing firm. As a result, the underwriter will have to cancel the offering and return any fees paid by the issuing firm.
A firm commitment offering, the underwriter agrees to purchase all the securities being offered by the issuer and then resell them to the public. If the underwriter overestimates the demand for the securities and is unable to sell them at the expected price, they may face losses. In such a scenario, the underwriter has several options, including lowering the bid price to the issuing firm or increasing the fees charged to the issuer. However, if these options do not work, the underwriter may have to cancel the offering and refund the fees paid by the issuing firm. Therefore, option D is the most appropriate answer.
Learn more about an underwriter: https://brainly.com/question/15649611
#SPJ11
Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called Group of answer choices auditing. economics. finance. accounting.
Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called accounting.
Accounting is a fundamental process in business and financial management. It involves systematically recording financial transactions, classifying them into appropriate categories, and summarizing the information to create financial statements such as the income statement, balance sheet, and cash flow statement. These financial statements provide a snapshot of a company's financial performance, position, and cash flows, enabling decision-makers to analyze and make informed decisions about the organization's operations, investments, and financial strategies.
While auditing, economics, and finance are related disciplines, each has its own distinct focus. Auditing involves examining and evaluating financial records and statements to ensure accuracy, compliance, and reliability. Economics studies the production, distribution, and consumption of goods and services within an economy. Finance, on the other hand, focuses on managing financial resources, investments, and the financial aspects of decision making. However, accounting serves as the foundation for providing the necessary financial information in these areas.
learn more about "economic ":- https://brainly.com/question/17996535
#SPJ11
Which function identifies prospects in the marketplace, works with research and development to create products, develops promotion strategies, and establishes prices?
The function that identifies prospects in the marketplace, works with research and development to create products, develops promotion strategies and establishes prices is known as Marketing.
What is Marketing?It refers to the process of creating, distributing, pricing and promoting goods, services in order to facilitate satisfying exchange relationships with customers and develop and maintain favorable relationships with stakeholders in a dynamic environment.
Read more about Marketing
brainly.com/question/25369230
#SPJ1
The assets of star company are and the total liabilities are_____.. the equity is ________.
The assets of Star Company are the resources it owns, such as cash, inventory, equipment, and investments. The total liabilities are the debts or obligations owed by the company, such as loans, accounts payable, and accrued expenses. The equity represents the residual interest in the assets after deducting liabilities.
To find the total liabilities, you would subtract the equity from the assets. For example, if the assets of Star Company are $500,000 and the equity is $200,000, the total liabilities would be $300,000 ($500,000 - $200,000).
Remember, the assets must always equal the sum of the liabilities and equity. This is known as the accounting equation: Assets = Liabilities + Equity.
To know more about liabilities visit:-
https://brainly.com/question/33535671
#SPJ11
the mercantilist doctrine promoted government intervention in order to achieve
mercantilism, monetary principle and exercise common in Europe from the 16th to the 18th century that promoted governmental rules of a nation's economy for the purpose of augmenting country strength at the expense of rival national powers. It used to be the economic counterpart of political absolutism.
Is there authorities intervention in mercantilism?Mercantilist monetary policies count on authorities intervention to hinder imports and protect home industries. Modern-day mercantilist insurance policies consist of tariffs, subsidizing home industries, devaluation of currencies, and restrictions on the migration of overseas labor.
The mercantilist goal used to be to maximize a nation's export surplus—the stability of trade, which used to be equated with the future prosperity and strength of the realm—and the capability were low cost manufacturing inputs, that is, low-cost raw materials (for which colonies proved useful) and cheap, and consequently poor, labor at home.
Learn more about mercantilism here:
https://brainly.com/question/599745#SPJ4if a stock consistently goes down (up) by 1.21% when the market portfolio goes dow (up) by 1.27%, then its beta equals:
A stock's volatility or systematic risk, as compared to the market as a whole, is measured by its beta. It gauges how much a stock's price fluctuates in response to movements in the general market.
To calculate the beta of the stock, we need to use the formula:
Beta = Covariance of Stock Returns and Market Returns / Variance of Market Returns
Given that the stock consistently goes down (up) by 1.21% when the market portfolio goes down (up) by 1.27%, we can calculate the covariance as:
Covariance = -1.21% x 1.27% = -0.015367%
To calculate the variance of market returns, we need to know the standard deviation of the market returns. Let's assume it is 2%. Then, the variance can be calculated as:
Variance = (2%)^2 = 0.04
Now, we can substitute these values into the formula to get:
Beta = -0.015367% / 0.04 = -0.38417
Therefore, the beta of the stock is -0.38417. This means that the stock is less volatile than the market, as its beta is negative. If the market goes up by 1%, we can expect the stock to go down by 0.38417%.
To know more about Systematic Risk visit:
https://brainly.com/question/31786280
#SPJ11
6. This paycheck method can have many fees associated with it (1 point)
Paper Paycheck
Direct Deposit
Payroll Card
Answer:
Paper Paycheck
Zoom In, Inc. is engaged in the business of coding, with an emphasis on Internet marketing, business apps, and intra-corporate networks. In all of Zoom In’s business activities, it is subject to United States laws and regulations. The basis for all law in the U.S. is _________.a. the U.S. Constitution.
b. the executive orders of the president.
c. each of the states' individual constitutions.
d. legislation enacted by Congress.
Answer:
Option A. The U.S. Constitution.
Explanation:
The reason is that the US constitution provides the basic framework for the laws to be formulated and passed both in the US National Assembly and the Senate. The laws cannot be formulated if the US constitution doesn't allows the passing of the law which means that the constitution must be amended first. When the slavery was to be eliminated in 1865, the first problem was that passing the elimination of slavery law was inconflict with the US constitution. So the constitution was amended before passing the law to eliminate the conflict.
In the nutshell, every law originates because of different reasons like Technological reasons, Social reasons, Cultural reason, etc) but the basis remains the same which is US constitution which is the basic framework for passing the law.
Instructions: View and learn from the Compensation and Benefits link (Links to an external site.), then read the Putting Compensation and Benefits to Work handout. Also read the article concerning benefits-added-during-pandemic-likely-to-remain-1.aspx.pdf Download benefits-added-during-pandemic-likely-to-remain-1.aspx.pdfOnce you have have a complete understanding of all the objectives that impact compensation and benefits, respond to the questions below.
Questions:
Now that you have an understanding of compensation and benefits and how they are effectively incorporated into a business, answer the following questions:
a. What are all the elements of a compensation and benefit survey?
b. How are pay levels and pay grades related and used as part of a company's compensation and benefit package?
c. Why are market pay lines important for consideration in pay?
d. How does a company's philosophy impact the benefits they offer?
e. Summarize the article concerning benefits that were added during the pandemic and your opinion on this topic.
a. The elements of a compensation and benefit survey are: They are documents that describe the duties, responsibilities, skills, and education needed for the job and also includes a summary of benefits that the employee is entitled to.
This document is used as a guide when creating pay grades and pay levels.Employee Compensation: It is the total amount of money and benefits that an employee receives in exchange for working at an organization.Benefit Programs: The benefit programs that an organization provides to its employees include life insurance, medical and dental insurance, and pension plans.b. Pay levels and pay grades are used as part of a company's compensation and benefit package because they provide a framework that ensures the employees are paid fairly and equally. Pay grades are used to group jobs that require similar skills, education, and experience, whereas pay levels are used to determine how much an employee should be paid within the grade for the job they are performing.c. Market pay lines are important for consideration in pay because they help an organization to determine how much they should pay their employees.
If an organization pays below the market pay line, they may struggle to retain their top employees, whereas if they pay above it, they may be spending too much money and not making enough profit. Therefore, the market pay line is an important consideration in pay.d. A company's philosophy impacts the benefits they offer in a number of ways. A company that values employee development, for example, may offer training programs or tuition reimbursement. A company that values work-life balance may offer flexible working arrangements, while a company that values family may offer parental leave or child care services.e. The article "Benefits Added During Pandemic Likely to Remain" discusses how the pandemic has led to many companies adding new benefits to their compensation packages, such as mental health services and flexible working arrangements. These benefits are likely to remain as companies have seen the positive impact they have had on employee productivity and morale. In my opinion, these benefits are a positive change and are essential for ensuring that employees are happy and healthy, which in turn benefits the organization as a whole.
To know more about benefits that the employee visit
https://brainly.com/question/12143528
#SPJ11
what source of information is most useful for telling you whether a company is worth investing in
Investors can find information about a company's financial status, prospects for the future, and past performance in corporate filings. This kind of data is necessary for you to determine whether particular stocks, bonds, or mutual funds are wise investments.
Stocks are a sort of instrument that represent a holder's portion of a company and are frequently referred to as equity. As a result, the investors in that proportion own the company's assets and profits. Companies raise money by selling stock in order to finance future growth. The majority of stock transactions occur on stock exchanges like the New York Stock Exchange, while it is also possible to trade equities privately (or NYSE). Even though the bond market is larger, the stock market attracts more media attention. In terms of return over time, historically, stocks have outperformed other investment types. The Securities Exchange Commission (SEC), which ensures the fair and effective operation of the securities markets, regulates stock trading in order to protect investors.
Learn more about stock here
https://brainly.com/question/14649952
#SPJ9
What do you think are the most important components of budgeting? Why?
Answer:
I would have to say figuring out ur cash flow where its going after u earn it and making sure u keep track of ur savings
Explanation:
what is the impact of atm on banking sector?
Answer:
Explanation:
ATM s are of great use to the banks as the reduce the number of people storming the banks for withdrawal of money as well as deposit of money it reduces cost of operation and from customer point of view it is available easily near by hence travelling further distance to the bank is not required
ATMs are one of the most convenient services provided by the banks to customers. It is beneficial to banks as it is to its customers. It helps banks to save cost and time in withdrawing money and various other services which are now provided by ATM.
Automated teller machines, or ATMs as they are more commonly referred to, are a convenient way to conduct one-on-one transactions quickly and easily. One can do self-serviced transactions with these machines without a physical teller's aid or a trip to the bank branch. Cash withdrawals, cash deposits, and fund transfers are just a few of the many transactions possible with automated teller machines, or ATMs. Although the majority of customers only use ATMs to withdraw cash, these additional transactions make the service more effective.
With the advent of the ATM, users' financial lives became simpler because they could now perform simple transactions on their own with the aid of an ATM, which was much more practical than often visiting the bank. The ability for users to transact between banks is another significant advantage of an ATM. This means you can still use basic services like cash withdrawals from the ATM even if you don't have an account with the bank that runs the machine. Again, this saves you time and comes in handy in an emergency because you won't need to go to the ATM at your bank every time you need a quick infusion of cash. ATM helps banks operate more cheaply by lowering the number of human operations. The ATM provides service 24 hours a day which means customers can avail of money and other services at any time of the day.
Learn more about ATM : https://brainly.com/question/24198010
Cycle Wholesaling sold merchandise on account, with terms n/60, to Sarah's Cycles on February 1 for $1,250 (cost of goods sold of $725). On February 9, Sarah's Cycles returned to Cycle Wholesaling one-quarter of the merchandise from February 1 (cost of goods returned was $195). Cycle Wholesaling uses a perpetual inventory system, and it allows returns only within 15 days of initial sale. Required:
Answer:
1. 1-Feb
Dr Accounts receivable 1,250
Cr Sales revenue 1,250
2 . 1-Feb
Dr Cost of goods sold 725
Cr Inventory 725
3. 9-Feb
Dr Sales revenue 312.50
Cr Accounts Receivable 312.50
4. 9-Feb
Dr inventory 195
Cr Cost of goods sold 195
5. 2-Mar
Dr Cash 937.50
Cr Accounts receivable 937.50
B. Gross profit percentage=43.47%
Explanation:
A. Preparation of the journal entries to record sales , goods return on February 9 and Cash collected on March 2
1 to 3 Preparation of the journal entries to record sales
1. 1-Feb
Dr Accounts receivable 1,250
Cr Sales revenue 1,250
2 . 1-Feb
Dr Cost of goods sold 725
Cr Inventory 725
3. 9-Feb
Dr Sales revenue 312.50
Cr Accounts Receivable 312.50
(1/4*1,250)
4. Preparation of the journal entry to record goods return on February 9
9-Feb
Dr inventory 195
Cr Cost of goods sold 195
5. Preparation of the journal entry to record collected on March 2
2-Mar
Dr Cash 937.50
Cr Accounts receivable 937.50
(1,250-312.50)
B. Calculation for the gross profit percentage for sales to Sarah's Cycles
First step is to find the gross profit
Net sales 937.50
Less Cost of goods sold (530)
(725-195 )
Gross profit 407.50
Now let calculate the Gross profit percentage using this formula
Gross profit percentage = Gross profit/Sales
Let plug in the formula
Gross profit percentage=407.50/937.50
Gross profit percentage=0.4347*100
Gross profit percentage=43.47%