Question

The adjusted trial balance of Dawson Company contained the following information. Assume the tax rate is 33%:

Debit Credit
Sales revenue $425,000
Sales returns and allowances $ 20,000
Sales discounts 5,000
Cost of goods sold 300,000
Operating expenses 61,000
Interest revenue 2,000
Interest expense 1,000
Compute the gross profit. rate(%)

Answer 1

29.41%

Step-by-step explanation:

Particulars Amount

Sales Revenue $425,000

Less: Cost of goods sold $300,000

Gross profit $125,000

Gross Profit rate(%) also known as gross profit margin percentage is calculated by (Revenue - Cost of goods sold)/Revenue

Gross profit margin percentage = $425,000 - $300,000 / $425,000

Gross profit margin percentage = $125,000 / $425,000

Gross profit margin percentage = 0.29412

Gross profit margin percentage = 29.41%