Sanchez Company engaged in the following transactions during Year 1:1)Started the business by issuing $42,000 of common stock for cash.2)The company paid cash to purchase $26,400 of inventory.3)The company sold inventory that cost $16,000 for $30,600 cash.4)Operating expenses incurred and paid during the year, $14,000.Sanchez Company engaged in the following transactions during Year 2:1)The company paid cash to purchase $35,200 of inventory.2)The company sold inventory that cost $32,800 for $57,000 cash.3)Operating expenses incurred and paid during the year, $18,000.Note: Sanchez uses the perpetual inventory system. What is Sanchez's gross margin for Year 2?

Question

Quizplus · Accepted Answer

Gross margin is calculated as sales revenue minus the cost of goods sold (COGS). For Year 2, sales revenue is $57,000 and COGS is $32,800. Therefore, the gross margin is $57,000 - $32,800 = $24,200.

Sanchez Company Engaged in the Following Transactions During Year 1:1)Started