Suppose Austin Sound had sales of $300,000 and sales returns of $45,000. Cost of goods sold was $152,000. How much gross profit did Austin Sound report?
- $255,000
- $88,000
- $148,000
- $103,000
Explanation
To calculate the gross profit, use the formula:
Gross Profit = Net Sales - Cost of Goods Sold
First, calculate net sales:
Net Sales = Sales - Sales Returns
Net Sales = $300,000 - $45,000 = $255,000
Then, calculate gross profit:
Gross Profit = Net Sales - Cost of Goods Sold
Gross Profit = $255,000 - $152,000 = $103,000
So, Austin Sound reported a gross profit of $103,000.
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