Consider the following short case as you respond to the next question: VLC Corporation sold merchandise with a cost of $200 on account for $300 to PRT Corporation; credit terms were 2 / 10, n / 30. VLC paid the outgoing freight charge of $10. PRT paid the invoice within the discount period.Inclusive of all the transactions that affect the income statement, VLC's gross profit on the sale was:
A)$100
B)$90
C)$94
D)$84

Question

Quizplus · Accepted Answer

The cost of the merchandise sold was $200 and VLC sold it for $300, so the revenue from the sale is $300. 
Since PRT paid within the discount period, they receive a 2% discount on their total invoice amount, which is $300 - (2% x $300) = $294. 
Therefore, VLC's gross profit on the sale is $294 - $200 - $10 (outgoing freight charge) = $84. 
So, the correct answer is choice C.

Consider the Following Short Case as You Respond to the Next