Dollar Town is a merchandising company that uses the periodic inventory system. Selected account balances are listed below:

-Refer to the information provided for Dollar Town. Calculate the company's gross margin.

Question

Dollar Town is a merchandising company that uses the periodic inventory system. Selected account balances are listed below:
 
-Refer to the information provided for Dollar Town. Calculate the company's gross margin.

Quizplus · Accepted Answer

To calculate gross margin, we need to subtract cost of goods sold (COGS) from net sales. 
Net sales = 230,400 
COGS = Beginning inventory + Purchases - Ending inventory 
Beginning inventory = 21,600 
Purchases = 194,400 
Ending inventory = 34,800 
COGS = 21,600 + 194,400 - 34,800 = 181,200 
Gross margin = Net sales - COGS = 230,400 - 181,200 = 49,200 
Therefore, the correct answer is B) $43,200.

Dollar Town Is a Merchandising Company That Uses the Periodic