Question

At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $500,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be a. $1,000,000 and 70%. b. $1,400,000 and 30%. c. $1,000,000 and 30%. d. $1,400,000 and 70%.

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $500,000 and sales of $2,000,000.

Cost of goods sold= beginning inventory + purchase - ending inventory

COGS= 400,000 + 1,500,000 - 500,000= 1,400,000

Sales= 2,000,000

COGS= 1,400,000

Gross profit= 600,000 30%