In the Clark Company, sales were $480,000, sales returns and allowances were $30,000, and cost of goods sold was $288,000. The gross profit rate was

Question

Quizplus · Accepted Answer

Gross profit is calculated as sales minus sales returns and allowances, then subtracting the cost of goods sold. Gross profit rate is gross profit divided by net sales. Here, net sales are $450,000 ($480,000 - $30,000), and gross profit is $162,000 ($450,000 - $288,000). The gross profit rate is 36% ($162,000 / $450,000).

In the Clark Company, Sales Were $480,000, Sales Returns and Allowances