Given the following for a company: sales $48,000, sales returns and allowances $6,000, operating expenses $6,200, beginning inventory $900, net purchases $9,100, ending inventory $2,300, find the company's gross profit.
A)$34,000
B)$43,000
C)$34,003
D)$34,300
E)None of these

Question

Quizplus · Accepted Answer

Gross profit is calculated as sales minus sales returns and allowances minus cost of goods sold (COGS). COGS is calculated as beginning inventory plus net purchases minus ending inventory. So, COGS = $900 + $9,100 - $2,300 = $7,700. Sales minus sales returns and allowances = $48,000 - $6,000 = $42,000. Therefore, gross profit = $42,000 - $7,700 = $34,300.

Given the Following for a Company: Sales $48,000, Sales Returns