Question

Martin Company engaged in the following transactions during Year 1: • Started the business by issuing $13,100 of common stock for cash. • The company paid cash to purchase $7,900 of inventory. • The company sold inventory that cost $5,300 for $10,900 cash. • Operating expenses incurred and paid during the year, $4,800. 5:31 Martin Company engaged in the following transactions during Year 2: • The company paid cash to purchase $11,400 of inventory • The company sold inventory that cost $9,500 for $17,500 cash. Operating expenses incurred and paid during the year, $5,800. . Martin uses the perpetual inventory system. What is Martin's gross margin for the Year 2? Multiple Choice $2,200 $6.100 $ 2,000. $8.000 ME < Prev 18 of 60 III Next >

Answer 1

Ans. C) 8000

gross margin for year 2 = Sales in year 2 - cost of goods sold

= 17500 - 9500 = 8000

Operating expenses will not be taken into consideration for calculation of gross profits.