Response to the following questions:
1. During the current year, merchandise is sold for $200,000 cash and for $950,000 on account. The cost of the merchandise sold is $805,000.
a. What is the amount of the gross profit?
b. Compute the gross profit as a percent of sales.
c. Will the income statement necessarily report a net income? Explain.
2. For the fiscal year, sales were $3,570,000, sales discounts were $320,000, sales returns and allowances were $240,000, and the cost of merchandise sold was $2,142,000. What was the amount of net sales and gross profit?