For 2014, cost of goods available for sale for Tate Corporation was $2,700,000. The gross profit rate on sales was 20%. Sales for the year were $2,400,000. What was the amount of the ending inventory?
A) $0.
B) $780,000.
C) $540,000.
D) $480,000.

Question

Quizplus · Accepted Answer

Cost of goods sold = Cost of goods available for sale - Ending inventoryCost of goods sold = $2,700,000 - Ending inventoryGross profit = Sales - Cost of goods soldGross profit = $2,400,000 - Cost of goods soldGross profit rate = Gross profit / Sales20% = (Gross profit / $2,400,000)Gross profit = $480,000Cost of goods sold = $2,400,000 - $480,000 = $1,920,000Ending inventory = $2,700,000 - $1,920,000 = $780,000

For 2014, Cost of Goods Available for Sale for Tate