In the Clark Company, sales were $320,000, sales returns and allowances were $20,000, and cost of goods sold was $180,000.The gross profit rate was

Question

Quizplus · Accepted Answer

Gross profit is calculated as sales minus sales returns and allowances, minus cost of goods sold. The gross profit rate is then the gross profit divided by net sales. Here, net sales are $320,000 - $20,000 = $300,000. Gross profit is $300,000 - $180,000 = $120,000. The gross profit rate is $120,000 / $300,000 = 0.40 or 40%.

In the Clark Company, Sales Were $320,000, Sales Returns and Allowances