At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported an ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be
A) $1,500,000 and 66.7%.
B) $2,250,000 and 40%.
C) $1,500,000 and 40%.
D) $2,250,000 and 60%.
The income statement of a firm shows all the costs incurred and various tiers of earnings. The levels of income shown are gross profit, net operating income, earnings before taxes, and net income.
Answer and Explanation: 1
The correct answer is option B) $2,250,000 and 40%.
The cost of goods sold is given by:
- = Beginning inventory + purchased cost of goods - ending...
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fromChapter 2 / Lesson 6
Learn how to prepare an income statement and see what's included in a basic income statement. See the statement of retained earnings with an example of how it works.