Backyards,Inc.,sells lawn furniture.Selected financial information for the most recent year follows. Beginning merchandise inventory on January 1 was $32,000.
Ending merchandise inventory on December 31 was $37,000.
Purchases during the year were $101,000.
Selling and administrative expenses were $75,000.
Sales for year were $257,000.
-
What was gross profit?

Question

Quizplus · Accepted Answer

Gross Profit = Sales - Cost of Goods Sold
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory

Cost of Goods Sold = $32,000 + $101,000 - $37,000
Cost of Goods Sold = $96,000

Gross Profit = $257,000 - $96,000
Gross Profit = $161,000

Therefore, the answer is choice C, $161,000.