Question

Challenge Tennis & Recreation's operating activities for the year are listed below.Purchases$174,000Operating expenses62,000Beginning inventory27,000Ending inventory37,000Sales revenue333,000What is the gross profit for the year?A) $159,000B) $333,000C) $97,000D) $169,000

Answer 1

Answer:

D) $169,000

Explanation:

Gross profit is the measurement of profit after providing for cost of goods sold, it don not include any other operating or non-operating expenses.

Here, for the provided information we have,

Cost of goods sold = Opening Inventory + Purchases in the period - Closing inventory

Opening Inventory = $27,000

Purchases = $174,000

Closing Inventory = $37,000

Thus, cost of goods sold = $27,000 + $174,000 - $37,000 = $164,000

Sales Revenue = $333,000

Therefore, Gross profit = Sales Revenue - Cost of goods sold

= $333,000 - $164,000 = $169,000