Charlet Company sells office chairs to its customers. On June 10, Charlet purchased 40 office chairs from one of its suppliers, paying $120 per chair. On July 5, Rutherford Corporation purchased 18 of these office chairs from Charlet for a list price of $200 each. Rutherford returned 3 of the chairs on July 7, paid one-half of its bill on July 16 and paid the other one-half of July 29. Charlet offers credit terms of 5/15, n/40 to its customers. Calculate the amount of gross profit Charlet Company earned from its sale to Rutherford Corporation.

Gross profit = $ 840.

Explanation:

Charlet cost of purchasing = $120 per chair * total chairs purchased from suppliers

                  =  $120 * 40 = $4800.

Rutherford:

Cost of purchasing = cost per price * chairs purchased

                                                                                 = $200 * 18 =  $3600.

less: purchase return ( 3* 200)                                                   =  ($600)

                                 Net Purchases                                                 $3000.

Charlet Company

 Gross profit =?

As we know that sales - cost = Gross profit.                                   $

Charlet sales ( $200 each * 18 chairs)                                           = 3600

less: Sales return ( 3*200)                                                             (600)

                                          Net sales                                             3000

less : Cost of goods sold

         (120 * 18)                                                                               (2160)

                                      Gross profit                                             840.

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