Question

A company has the following selected account balances: Sales $ 250,000 Sales Discounts 1,500 Sales Returns and Allowances 2,300 Sales Salaries Expense 56,000 Store Supplies Expense 15,000 Advertising Expense 8,000 Cost of Goods Sold 125,000 What is the gross profit that would appear on a multiple-step income statement:

Answer 1

$121,200

Step-by-step explanation:

The gross profit that would appear on a multiple-step income statement can be determined as :

Gross Profit = Net Sales - Cost of Sales

where,

Net Sales = Sales - Sales Discounts - Sales Returns and Allowances

= $ 250,000 - $1,500 - $2,300

= $246,200

therefore,

Gross Profit = $246,200 - $125,000

= $121,200