Use this information to answer the following question. In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net sales for the period were
A)$305,000.
B)$275,000.
C)$295,000.
D)$215,000.

Question

Use this information to answer the following question.  In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net sales for the period were
A)$305,000. 
B)$275,000. 
C)$295,000. 
D)$215,000.

Quizplus · Accepted Answer

We can use the formula:
Net Sales = Gross Sales - Sales Returns and Allowances
Gross Sales = Cost of Goods Sold + Ending Merchandise Inventory – Beginning Merchandise Inventory
From the given information,
Beginning Merchandise Inventory = $22,000
Ending Merchandise Inventory = $14,000
Cost of Goods Sold = Gross Profit - Operating Expenses
Gross Profit = Net Sales - Cost of Goods Sold
Assuming Operating Expenses = 0
We can calculate the Gross Profit as follows:
Gross Profit = $63,000
Therefore,
Gross Sales = $63,000 + $14,000 - $22,000 = $55,000
Net Sales = Gross Sales - Sales Returns and Allowances
Assuming Sales Returns and Allowances = $0
Net Sales = $55,000
Hence, the best choice is C) $295,000.

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