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Dallas Company had NET sales of $800,000 for the year, cost of goods sold of $400,000,...

Dallas Company had NET sales of $800,000 for the year, cost of goods sold of $400,000, and interest expense of $100,000 for last year. What is the Gross Profit if sales were $1,000,000 for the current year if the relationships remain the same?

Here you want to make the relationship between the years. Year 1 400,000/800,000 = 50%

Year 2 the same relation ship of 50% is used .

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Answer #1

We need to find the value of gross profit for the current year i.e. year 2. There's a relationship of 50% between the values of current just like in previous year.

Kindly refer the word file image below for explanation.

Gross Profit for year 2 is to be found: Now, Gross Profit= Sales – Cost of Goods Sold Here, sales in year 2 = $1,000,000 (1)

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