Question

Thompson TV and Appliance reported the following in its 2021 financial statements: 2021 Sales $ 427,000 Cost of goods sold: Inventory, January 1 80,000 Net purchases 325,000 Goods available for sale 405,000 Inventory, December 31 93,000 Cost of goods sold 312,000 Gross profit $ 115,000 Thompson's 2021 gross profit ratio is

Answer 1

26.93%

Step-by-step explanation:

Given that,

Sales = $427,000

Inventory, January 1 = 80,000

Net purchases = 325,000

Goods available for sale = 405,000

Inventory, December 31 = 93,000

Cost of goods sold = 312,000

Gross profit = $115,000

Gross profit ratio = (Gross profit ÷ sales) × 100

= ($115,000 ÷ $427,000) × 100

= 0.2693 × 100

= 26.93%

Therefore, Thompson's 2021 gross profit ratio is 26.93%.