The following information appears on the income statement of the Richer Company at the end of th year.
$\begin{array}{lr}
\text { Beginning finished goods inventory } & \$ 197,000 \
\text { Ending finished goods inventory } & 204,000 \
\text { Sales } & 360,100 \
\text { Cost of Goods Manufactured } & 136,000
\end{array}$
Gross Profit on Sales is:

Question

Quizplus · Accepted Answer

Gross Profit is calculated as Sales minus Cost of Goods Sold (COGS). COGS is calculated as Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory. Thus, COGS = $197,000 + $136,000 - $204,000 = $129,000. Therefore, Gross Profit = Sales - COGS = $360,100 - $129,000 = $231,100, which rounds to $231,000.

The Following Information Appears on the Income Statement of the Richer