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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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The following information is available for Cooke Company for the current year:

Chapter 5, Problem 2MC, The following information is available for Cooke Company for the current year: The gross margin is

The gross margin is 40% of net sales. What is the cost of goods available for sale?

  1. a. 5840,000
  2. b. $960,000
  3. c. $1,200,000
  4. d. $1,220,000

To determine

Calculate the cost of goods available for sale.

Explanation

Calculate the cost of goods available for sale:

Step 1: Calculate the gross margin:

Gross margin=Net sales×Percentage of net sales=$1,800,000×40%=$720,000

Step 2: Calculate the cost of goods sold:

Cost of goods sold=Net salesGross margin=$1,800,000$720,

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