At the beginning of the year, Meng Company had an inventory of ¥500,000. During the year, the company purchased goods costing ¥2,000,000. If Meng Company reported ending inventory of ¥750,000 and sales of ¥2,500,000, the company's cost of goods sold and gross profit rate must be

Question

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Cost of Goods Sold (COGS) is calculated as: Beginning Inventory + Purchases - Ending Inventory = ¥500,000 + ¥2,000,000 - ¥750,000 = ¥1,750,000. Gross Profit is Sales - COGS = ¥2,500,000 - ¥1,750,000 = ¥750,000. Gross Profit Rate is Gross Profit / Sales = ¥750,000 / ¥2,500,000 = 30%.

At the Beginning of the Year, Meng Company Had an Inventory