Richmond Company had the following information taken from its 20A adjusted trial balance: Sales, $200,000; Sales Discounts, $4,000; Beginning Inventory, $10,000; and Purchases, $140,000. A physical count of the merchandise on hand at the end of the year showed $20,000. Compute the gross margin (gross profit) that would appear in the statement of earnings.

Question

Quizplus · Accepted Answer

Beginning Inventory + Purchases = Cost of Goods Available for Sale

$10,000 + $140,000 = $150,000

Cost of Goods Available for Sale - Ending Inventory = Cost of Goods Sold

$150,000 - $20,000 = $130,000

Sales - Sales Discounts - Cost of Goods Sold = Gross Margin

$200,000 - $4,000 - $130,000 = $66,000.

Richmond Company Had the Following Information Taken from Its 20A