Georgia Peach Company reported net sales in June of the current year of $1,000,000. At the beginning of June, the company reported beginning inventory of $368,000. Cost of goods purchased during June amounted to $217,500. The company reported ending inventory at the end of June of $226,750. The company's gross profit rate for June of the current year was:
A) 35.9%
B) 18.8%
C) 81.2%
D) 64.1%
E) Impossible to determine from the information provideD.Combining beginning inventory of $368,000 with purchases for the period of $217,500 yields cost of goods available for sale of $585,500. If we then subtract the ending inventory of $226,750, we get cost of goods sold of $358,750. Subtracting cost of goods sold ($358,750) from sales ($1,000,000) yields gross profit of $641,250. Dividing gross profit of $641,250 by sales of $1,000,000 yields a gross profit percentage of 64.125% or 64.1% rounded.

Question

Quizplus · Accepted Answer

By using the formula of gross profit rate, we can calculate it as follows:
Gross Profit = Net Sales - Cost of Goods Sold
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
Cost of Goods Sold = $368,000 + $217,500 - $226,750
Cost of Goods Sold = $358,750
Gross Profit = $1,000,000 - $358,750
Gross Profit = $641,250
Gross Profit Rate = (Gross Profit / Net Sales) x 100%
Gross Profit Rate = ($641,250 / $1,000,000) x 100%
Gross Profit Rate = 64.125% or 64.1% rounded
Therefore, the correct answer is D, 64.1%.

Georgia Peach Company Reported Net Sales in June of the Current