During the current year, merchandise is sold for $31,850,000. The cost of the merchandise sold is $24,206,000.a. What is the amount of the gross profit?b. Compute the gross profit percentage (gross profit divided by sales).c. Will the income statement necessarily report a net income? Explain.

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Asked Dec 9, 2019
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During the current year, merchandise is sold for $31,850,000. The cost of the merchandise sold is $24,206,000.
a. What is the amount of the gross profit?
b. Compute the gross profit percentage (gross profit divided by sales).
c. Will the income statement necessarily report a net income? Explain.

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Expert Answer

Step 1

Gross Profit:

 

Gross profit represents the revenue after the deduction of cost of goods sold from the net sales of a business.

Step 2

a.

 

Ascertain the amount of gross profit.

 

Hence, the amount of gross profit is $7,644,000.

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Gross profit = Net sales – Cost of goods sold = $31,850, 000 – $24, 206,000 = $7,644, 000

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Step 3

b.

 

Compute the gross profit percentage.

 

Hence, the gross pr...

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Gross profit x100 Gross profit percentage= Net sales S7, 644,000 -x100 S31,850,000 = 24%

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