Crystal Inc. is a merchandiser of stone ornaments. It sold 15,000 units in 2015. The company has provided the following information: $$\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 557,000 \
\hline \text { Purchases (excluding freight in) } & 300,000 \
\hline \text { Selling and Administrative Expenses } & 69,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Beginning Merchandise Inventory } & 45,000 \
\hline \text { Ending Merchandise Inventory } & 55,700 \
\hline
\end{array}$$ How much is the gross profit for 2015?

Question

Crystal Inc. is a merchandiser of stone ornaments. It sold 15,000 units in 2015. The company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 557,000 \
\hline \text { Purchases (excluding freight in) } & 300,000 \
\hline \text { Selling and Administrative Expenses } & 69,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Beginning Merchandise Inventory } & 45,000 \
\hline \text { Ending Merchandise Inventory } & 55,700 \
\hline
\end{array}$$ How much is the gross profit for 2015?

Quizplus · Accepted Answer

Gross profit is calculated by subtracting cost of goods sold from sales revenue. To find cost of goods sold, we need to calculate the cost of goods available for sale (beginning merchandise inventory + purchases + freight in) and then subtract the ending merchandise inventory.

Cost of goods available for sale = $45,000 + $300,000 + $15,000 = $360,000
Cost of goods sold = $360,000 - $55,700 = $304,300

Gross profit = $557,000 - $304,300 = $252,700

Therefore, the answer is choice C, $252,700.

Crystal Inc How Much Is the Gross Profit for 2015? A) $183,700

Crystal Inc How Much Is the Gross Profit for 2015?
A) $183,700