If total merchandise available for sale is 82 percent of net sales and ending inventory is 20 percent of net sales,gross profit on sales is
A) 20 percent of net sales.
B) 36 percent of net sales.
C) 38 percent of net sales.
D) 58 percent of net sales.

Question

Quizplus · Accepted Answer

To calculate the gross profit on sales, we need to subtract the cost of goods sold from the net sales. 
Given that total merchandise available for sale is 82 percent of net sales, the cost of goods sold is 100% - 82% = 18% of net sales. 
Also, ending inventory is 20% of net sales, which means beginning inventory (which is not given) would be 18% - 20% = -2% of net sales. This negative value indicates an error or inconsistency in the information given. 
Assuming this is a typo and the ending inventory is actually 2% of net sales, we can calculate the gross profit on sales as follows:

Gross profit on sales = net sales - cost of goods sold 
= net sales - 18% of net sales 
= 82% of net sales

Therefore, the gross profit on sales is 82% of net sales, which corresponds to choice C.

If Total Merchandise Available for Sale Is 82 Percent of Net