Lesmerises Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $40 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $2.85 per share.
-The gross margin percentage for Year 2 is closest to:
A) 53.4%
B) 671.4%
C) 34.8%
D) 14.9%

Question

Lesmerises Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $40 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $2.85 per share.
-The gross margin percentage for Year 2 is closest to:
A) 53.4% 
B) 671.4% 
C) 34.8% 
D) 14.9%

Quizplus · Accepted Answer

To calculate the gross margin percentage, we need to use the formula: Gross Margin Percentage = (Gross Profit / Net Sales) x 100.
From the income statement, we can find that the Gross Profit of the company is $280,000 and the Net Sales are $800,000. 
Therefore, gross margin percentage = (280,000 / 800,000) x 100 = 35%
The closest option to this value is C) 34.8%, so that is the correct answer.

Lesmerises Corporation's Most Recent Balance Sheet and Income Statement Appear