A company shows the following balances: $$\begin{array} { l r }
\text { Sales Revenue } & \$ 2,500,000 \
\text { Sales Returns and Allowances } & 400,000 \
\text { Sales Discounts } & 50,000 \
\text { Cost of Goods Sold } & 1,353,000
\end{array}$$ What is the gross profit rate?
A) 34%
B) 46%
C) 66%
D) 54%

Question

A company shows the following balances: $$\begin{array} { l r } 
\text { Sales Revenue } & \$ 2,500,000 \
\text { Sales Returns and Allowances } & 400,000 \
\text { Sales Discounts } & 50,000 \
\text { Cost of Goods Sold } & 1,353,000
\end{array}$$ What is the gross profit rate?
A) 34%
B) 46%
C) 66%
D) 54%

Quizplus · Accepted Answer

Gross profit is calculated as Sales Revenue minus Sales Returns and Allowances, Sales Discounts, and Cost of Goods Sold. Gross Profit = $2,500,000 - $400,000 - $50,000 - $1,353,000 = $697,000. The gross profit rate is Gross Profit divided by Net Sales (Sales Revenue - Sales Returns and Allowances - Sales Discounts). Net Sales = $2,500,000 - $400,000 - $50,000 = $2,050,000. Gross Profit Rate = $697,000 / $2,050,000 = 34%.

A Company Shows the Following Balances What Is the Gross Profit Rate? A) 34% B) 46

A Company Shows the Following Balances What Is the Gross Profit Rate?
A) 34%
B) 46