In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000.The gross profit rate was

Question

Quizplus · Accepted Answer

First, we need to calculate the net sales by subtracting sales returns and allowances from sales:
Net sales = sales - sales returns and allowances = $750,000 - $30,000 =$720,000

Now, we can calculate the gross profit by subtracting cost of goods sold from net sales:
Gross profit = net sales - cost of goods sold = $720,000 - $450,000 = $270,000

Finally, we can calculate the gross profit rate as a percentage of net sales:
Gross profit rate = (gross profit / net sales) x 100% = ($270,000 / $720,000) x 100% ≈ 37.5%

Therefore, the best choice is B, and the gross profit rate is 37.5%.

In the Augie Company, Sales Were $750,000, Sales Returns and Allowances