ABC Inc. had net sales of $120,000 during 2013. Its finished goods inventories were valued at $20,000 on January 1^st, 2013. During the year, $60,000 of goods was purchased for resale. The company has a gross profit percentage of 40%. What was the company's cost of goods sold for 2013? A) $8,000. B) $72,000. C) $48,000. D) $60,000.

Question

Quizplus · Accepted Answer

The cost of goods sold (COGS) can be calculated using the formula: COGS = Beginning Inventory + Purchases - Ending Inventory. However, the ending inventory is not given directly. Instead, we can use the gross profit percentage to find COGS. Gross profit is calculated as Net Sales - COGS. Given a gross profit percentage of 40%, it means COGS is 60% of net sales (100% - 40% = 60%). Therefore, COGS = 60% of $120,000 = $72,000.

ABC Inc Had Net Sales of $120,000 During 2013