Homework#7b: Instructions: Calculate Gross Profit and Gross Profit Ratio (CHS Learning Objective 5.6 Ratio Analysis) Lincoln...

Question

Question

Answer 1

Answer #1

Answer -

Step - (1) - Calculation of Gross Profit -

	Particulars	Explanation	Amount ($)
I.	Net sales revenue	Given in question	184000
II.	Ending inventory	Given in question	11600
III.	Beginning inventory	Given in question	17200
IV.	Purchases	Given in question	60400
V.	Purchase returns and allowances	Given in question	1100
VI.	Freight-in	Given in question	600
VII.	Early payment discount	(Purchases - Purchase returns and allowances) * 1% = ($60400 - $1100) * 1%	593
Gross Profit		(I + V + II + VII) - (III + IV + VI )	119093

.

Step - (2) - Calculation of Gross Profit Ratio -

Hence, Option - (C) is Correct.

Answer 2

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