Sullivan Company uses the periodic inventory system. The following balances were drawn from the accounts of Sullivan Company prior to the closing process: What is the gross margin that will be shown on the income statement?

Question

Sullivan Company uses the periodic inventory system. The following balances were drawn from the accounts of Sullivan Company prior to the closing process:  What is the gross margin that will be shown on the income statement?

Quizplus · Accepted Answer

Gross margin is calculated as sales revenue minus the cost of goods sold. From the given balances, we can calculate the cost of goods sold as $40,000 - $22,800 = $17,200. Therefore, the gross margin would be $25,600 - $17,200 = $8,400, which is option A.

Sullivan Company Uses the Periodic Inventory System