Use the information below to answer the following questions that refer to Table B-2. Based on the information in Table B-2, and given that the gross margin percent is 25%, what is the cost of sales?
$$\begin{array} { l c }
{ \text { Table B-2 } } & \
\text { Gross sales } & \$ 240,000 \
\text { Returns } & \$ 20,000 \
\text { Allowances } & \$ 20,000 \
\text { Gross margin } & 25 \% \
\text { Beginning inventory } & \$ 50,000 \
\text { Ending inventory } & \$ 50,000 \
\text { Expenses } & \$ 40,000 \
\text { Markdowns } & \$ 30,000 \
\text { Investment } & \$ 50,000
\end{array}$$
A) $75,000.
B) $150,000.
C) $55,000.
D) $12,500.
E) $50,000.

Question

Use the information below to answer the following questions that refer to Table B-2. Based on the information in Table B-2, and given that the gross margin percent is 25%, what is the cost of sales?
$$\begin{array} { l c } 
 { \text { Table B-2 } } & \
\text { Gross sales } & \$ 240,000 \
\text { Returns } & \$ 20,000 \
\text { Allowances } & \$ 20,000 \
\text { Gross margin } & 25 \% \
\text { Beginning inventory } & \$ 50,000 \
\text { Ending inventory } & \$ 50,000 \
\text { Expenses } & \$ 40,000 \
\text { Markdowns } & \$ 30,000 \
\text { Investment } & \$ 50,000
\end{array}$$
A) $75,000.
B) $150,000.
C) $55,000.
D) $12,500.
E) $50,000.

Quizplus · Accepted Answer

The net sales are calculated as gross sales minus returns and allowances: $240,000 - $20,000 - $20,000 = $200,000. With a gross margin of 25%, the cost of sales is 75% of net sales: 0.75 * $200,000 = $150,000.

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