Question

Determining Gross Profit

During the current year, merchandise is sold for $823,000. The cost of merchandise sold sold is $600,790.

a. What is the amount of the gross profit?
$

b. Compute the gross profit percentage (gross profit divided by sales). Round to the nearest whole number.
%

c. When will the income statement necessarily report a net income?

Answer 1

a)Gross Profit=Sales-COGS

=823000-600790

=$222,210

b) Gross Profit percentage=( Gross Profit/ sales)*100

=222210/823000

=27%

c)income statement is basically a summary of income and expenses if a business concern over a period. Income statement forms part of financial statements and is prepared at the end of a particular financial year/ period.

As such income statement will report income at the end of the accounting period.

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