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

Question

Quizplus · Accepted Answer

Gross profit is calculated as Sales - Cost of Goods Sold (COGS). COGS is calculated as Beginning Inventory + Purchases - Ending Inventory. Therefore, COGS = $150,000 + $225,000 - $118,000 = $257,000. Gross profit = Sales - COGS = $455,000 - $257,000 = $198,000.

If Sales = $455 000,purchases = $225 000,beginning Inventory =