The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | }
\hline \text { Purchases } & \$ 126,000 \
\hline \text { Selling and Administrative Expenses } & 90,000 \
\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \
\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \
\hline \text { Sales Revenue } & 250,000 \
\hline
\end{array}$$ What is the gross profit for 2009?
A) $120,000
B) $130,000
C) $140,000
D) $136,000

Question

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } 
\hline \text { Purchases } & \$ 126,000 \
\hline \text { Selling and Administrative Expenses } & 90,000 \
\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \
\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \
\hline \text { Sales Revenue } & 250,000 \
\hline
\end{array}$$ What is the gross profit for 2009?
A) $120,000
B) $130,000
C) $140,000
D) $136,000

Quizplus · Accepted Answer

Gross profit is calculated as Sales Revenue - Cost of Goods Sold. Cost of Goods Sold is calculated as Beginning Inventory + Purchases - Ending Inventory. Therefore, Cost of Goods Sold = 14,000 + 126,000 - 10,000 = 128,000. Gross profit is therefore 250,000 - 128,000 = 122,000.

The Following Information Pertains to Bright Toy Company's Operating Activities