Question

etermining Gross Profit During the current year, merchandise is sold for $990,000. The cost of the merchandise sold is $693,000. a. What is the amount of the gross profit? $fill in the blank 1 b. Compute the gross profit percentage (gross profit divided by sales). fill in the blank 2 % c. When will the income statement necessarily report a net income?

Answer 1

Answer:

Results are below.

Explanation:

A: To calculate the gross profit, we need to use the following formula:

Gross profit= sales - cost of goods sold

Gross profit= 990,000 - 693,000

Gross profit= $297,000

B: Now, the gross profit percentage:

Gross profit percentage= (gross profit / sales)*100

Gross profit percentage= (297,000 / 990,000)*100

Gross profit percentage= 30%

C: Finally, a net income is reported in the income statement at the moment of the sale. It doesn't matter if the sale was paid or not.