At the beginning of the year, Hunt Company had an inventory of $750,000.During the year, the company purchased goods costing $2,400,000.If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

Question

Quizplus · Accepted Answer

Cost of goods sold = Beginning inventory + Purchases - Ending inventory 
Cost of goods sold = $750,000 + $2,400,000 - $900,000 = $2,250,000

Gross profit = Sales - Cost of goods sold 
Gross profit = $3,750,000 - $2,250,000 = $1,500,000

Gross profit rate = (Gross profit / Sales) x 100% = ($1,500,000 / $3,750,000) x 100% = 40%

Therefore, the correct answer is B, $2,250,000 and 40%.

At the Beginning of the Year, Hunt Company Had an Inventory