ABC has no opening inventory.During the year,it buys 2000 microwave ovens at $300 each and sells 1500 of them for $500 each.Cash operating expenses are $40 000 and it owes wages of $10 000 at year-end.What is accrual profit for the year?
A) $250 000.
B) $260 000.
C) $100 000.
D) $110 000.

Question

Quizplus · Accepted Answer

The accrual profit is calculated as follows: Sales revenue (1500 units x $500) = $750,000. Cost of goods sold (1500 units x $300) = $450,000. Gross profit = $750,000 - $450,000 = $300,000. Operating expenses = $40,000 + $10,000 (owed wages) = $50,000. Accrual profit = $300,000 - $50,000 = $250,000.

ABC Has No Opening Inventory