In its first year of operations as a retailer, Hwang Ltd.reported a gross profit of $135,000, total purchases of $160,000, and an ending inventory of $75,000.Therefore, Hwang's sales in its first year must have been
A)$60,000.
B)$80,000.
C)$180,000.
D)$220,000.

Question

Quizplus · Accepted Answer

To find sales, use the formula: Sales = Cost of Goods Sold (COGS) + Gross Profit. COGS is calculated as: Beginning Inventory + Purchases - Ending Inventory. Assuming beginning inventory is $0 (first year), COGS = $160,000 - $75,000 = $85,000. Therefore, Sales = $85,000 + $135,000 = $220,000.

In Its First Year of Operations as a Retailer, Hwang