A Retailer Buys a Computer for Resale at $500

question 14

Essay

A retailer buys a computer for resale at $500.00 less 35%, 10%. The store marks the merchandise to cover expenses of 15% of the regular selling price and a net profit of 24% of the regular selling price. During a clearance sale, the appliance is sold at a markdown of 25%. What is the operating profit or loss?

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Journal Entry

A record in accounting that documents a business transaction in the general ledger, indicating debits and credits to specific accounts.

Consolidation Entries

Journal entries made in the process of preparing consolidated financial statements to eliminate intercompany transactions and balances among the entities of a consolidated group.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as one single entity.