Question

During the month, merchandise is sold for $23,500 cash and for $34,000 on account. The cost of goods sold is $41,500. What is the amount of gross profit?

a. $16,000
b. $23,500
c. $57,500
d. $41,500

Answer 1

The gross profit is calculated by subtracting the cost of goods sold from the total sales. The total sales are $57,500, and the cost of goods sold is $41,500, so the gross profit is $16,000.

Step-by-step explanation:

To calculate the gross profit, we subtract the cost of goods sold (COGS) from the total revenue. In this scenario:

Total revenue = Cash sales + Credit sales

Total revenue = $23,500 (cash) + $34,000 (on account) = $57,500

Gross Profit = Total revenue - Cost of Goods Sold (COGS)

Gross Profit = $57,500 - $41,500 = $16,000

Therefore, the correct answer is (a) $16,000. This represents the amount of gross profit generated from the sales during the month after accounting for the cost of goods sold.