Answer:
6,500 ; $2,000
Explanation:
The computation of the gross margin for the year 2 is shown below:
As we know that
Gross margin = Sales - cost of goods sold
= $15,000 - $8,500
= $6,500
Now for retained earning, first we have to find out the net income for both years which are shown below:
For year 1
Sales 8,400
Less: Cost of goods sold ($4,300)
Less: Operating expenses ($3,800)
Net income $300
For year 2
Sales $15,000
Less: Cost of goods sold ($8,500)
Less: Operating expenses ($4,800)
Net income $1,700
So, the retained earnings is
= $300 + $1,700
= $2,000
We simply added the net income for the year 1 and year 2 so that the retained earning could come
