Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie’s current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes:   Description Retail Price Cost Employee Price Specialized road bike $ 3,900 $ 2,500 $ 2,730 Rocky Mountain mountain bike   4,500   3,900   3,600 Trek road bike   3,400   2,100   2,380 Yeti mountain bike   5,900   5,240   4,720       b. What amount of deductions is Bad Dog allowed to claim from these transactions?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie’s current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes:
 

Description Retail Price Cost Employee Price
Specialized road bike $ 3,900 $ 2,500 $ 2,730
Rocky Mountain mountain bike   4,500   3,900   3,600
Trek road bike   3,400   2,100   2,380
Yeti mountain bike   5,900   5,240   4,720

 

 

 

b. What amount of deductions is Bad Dog allowed to claim from these transactions?

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