Schumacher Company uses the perpetual inventory system, and it engaged in the following transactions during 2014:
1) Started the business by issuing common stock for $7,500 cash
2) Paid cash to purchase $5,000 of inventory
3) Sold inventory that cost $3,000 for $7,250 cash
4) Incurred and paid operating expenses, $250
Schumacher Company engaged in the following transactions during 2015:
1) Paid cash to purchase $5,800 of inventory
2) Sold inventory that cost $7,000 for $15,150 cash
3) Incurred and paid operating expenses, $500
The gross margin for the year 2014 is:

Question

Quizplus · Accepted Answer

The gross margin is calculated as the selling price minus the cost of goods sold. In 2014, the cost of goods sold is $3,000 and the selling price is $7,250, so the gross margin is $4,250.

Schumacher Company Uses the Perpetual Inventory System, and It Engaged