Barney Company uses the perpetual inventory system. The company purchased $4,000 of merchandise from Bittiker Company under the terms n/30. Barney also paid $150 freight to obtain the goods under terms FOB shipping point. All of the merchandise purchased was sold for $9,000 cash. The amount of gross margin for this merchandise is:

Question

Quizplus · Accepted Answer

Gross margin is calculated as sales revenue minus the cost of goods sold (COGS). The sales revenue is $9,000. The COGS includes the purchase cost of $4,000 plus the $150 freight cost, totaling $4,150. Therefore, the gross margin is $9,000 - $4,150 = $4,850.

Barney Company Uses the Perpetual Inventory System