Question

LeGrand Corporation reported the following amounts in its income statement:

Sales revenue $440,000
Advertising expense 60,000
Interest expense 10,000
Salaries expense 55,000
Utilities expense 25,000
Income tax expense 45,000
Cost of goods sold 180,000
What was LeGrand's gross profit?
A) $220,000.
B) $120,000.
C) $260,000.
D) $180,000.

Answer 1

Correct option is (C)

Step-by-step explanation:

Given:

Sales revenue = $440,000

Cost of goods sold = $180,000

Gross profit is sales revenue less cost of goods sold.

Gross profit = 440,000 - 180,000

= $260,000

Other indirect expenses such as advertising, interest, salaries, utilities and income tax expenses are deducted from gross profit to arrive at net profit.