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If sales = $455,000, purchases = $225,000, beginning inventory = $150,000 and ending inventory = $118,000, gross profit is:$198,000$230,000$75,000$257,000

Question

If sales = 455,000,purchases=455,000, purchases = 225,000, beginning inventory = 150,000andendinginventory=150,000 and ending inventory = 118,000, gross profit is:

  • $198,000
  • $230,000
  • $75,000
  • $257,000
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Solution

To calculate the gross profit, we first need to calculate the cost of goods sold (COGS). The formula for COGS is: beginning inventory + purchases - ending inventory.

Here's the calculation:

COGS = 150,000(beginninginventory)+150,000 (beginning inventory) + 225,000 (purchases) - 118,000(endinginventory)=118,000 (ending inventory) = 257,000

Then, we subtract the COGS from sales to get the gross profit.

Gross profit = Sales - COGS = 455,000(sales)−455,000 (sales) - 257,000 (COGS) = $198,000

So, the gross profit is $198,000.

This problem has been solved

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