At the beginning of the year, Uptown Athletic had an inventory of $600,000.During the year, the company purchased goods costing $2,250,000.If Uptown Athletic reported ending inventory of $750,000 and sales of $3,000,000, their cost of goods sold and gross profit rate would be
A)$1,500,000 and 70%.
B)$2,100,000 and 30%.
C)$1,500,000 and 30%.
D)$2,100,000 and 70%.

Question

Quizplus · Accepted Answer

Cost of Goods Sold (COGS) is calculated as: Beginning Inventory + Purchases - Ending Inventory = $600,000 + $2,250,000 - $750,000 = $2,100,000. Gross Profit is Sales - COGS = $3,000,000 - $2,100,000 = $900,000. Gross Profit Rate is Gross Profit / Sales = $900,000 / $3,000,000 = 30%.

At the Beginning of the Year, Uptown Athletic Had an Inventory