Question

Gross profit

During the current year, merchandise is sold for $107,300 cash and $586,200 on account. The cost of the goods sold is $464,600. What is the amount of the gross profit?

Answer 1

Gross profit is calculated by subtracting the cost of goods sold (COGS) from total sales revenue.

First, we need to calculate the total sales revenue:

\[
\text{Total Sales Revenue} = \text{Cash Sales} + \text{Sales on Account}
\]

Using the values given:

\[
\text{Total Sales Revenue} = 107,300 + 586,200 = 693,500
\]

Now, we can calculate the gross profit:

\[
\text{Gross Profit} = \text{Total Sales Revenue} - \text{Cost of Goods Sold}
\]

Substituting in the values:

\[
\text{Gross Profit} = 693,500 - 464,600 = 228,900
\]

Therefore, the amount of the gross profit is **$228,900**.