Question

6. Assume jose company has the ff reported amounts: sales revenue $506,000, sales returns and allowance $13,000, cost of goods sold $330,000, operating expense $110,000, compute the ff
A. Net sales
B. Gross profit
C. Income from operation
D. Gross profit rate

Answer 1

A. Net sales = Sales revenue - Sales returns and allowance
Net sales = $506,000 - $13,000
Net sales = $493,000

B. Gross profit = Net sales - Cost of goods sold
Gross profit = $493,000 - $330,000
Gross profit = $163,000

C. Income from operation = Gross profit - Operating expense
Income from operation = $163,000 - $110,000
Income from operation = $53,000

D. Gross profit rate = (Gross profit / Net sales) x 100
Gross profit rate = ($163,000 / $493,000) x 100
Gross profit rate = 33.08% (rounded to two decimal places)