Question

During the current year, merchandise is sold for $199,500 cash and $626,800 on account. The cost of the goods sold is $537,100. What is the amount of the gross profit?

Answer 1

The formula for gross profit is:

Gross Profit = Total Sales Revenue - Cost of Goods Sold

We are given that the merchandise sold for $199,500 cash and $626,800 on account, so we have to find out the total sales revenue

This is the formula:

Total Sales Revenue = Cash Sales + Credit Sales

Total Sales Revenue = $199,500 + $626,800

Total Sales Revenue = $826,300

The cost of goods sold is given as $537,100. Substituting the values into the formula for gross profit, we get:

Gross Profit = $826,300 - $537,100

Gross Profit = $289,200

Therefore, the amount of the gross profit is $289,200.