The net sales figure of XYZ Company in 2012 was $300,000. If the cost of goods available for sale was $280,000 and gross margin was 35 percent of net sales, ending inventory must have been

Question

Quizplus · Accepted Answer

Gross margin is 35% of net sales, indicating that Cost of Goods Sold (COGS) is 65% of net sales. Therefore, the COGS for XYZ Company would be $195,000 ($300,000 x 65%). 
The cost of goods available for sale was $280,000.
Therefore, the ending inventory must be $85,000 ($280,000 - $195,000).

The Net Sales Figure of XYZ Company in 2012 Was