Expert: Bobby Soltani - 4/24/2006

Question
Hello:

How is the gross profit determined for the following?

If a store's merchandise inventory on April 1 is $47,483 and purchases for the three month period are $39,642, and the sales for the three month period are $66,071 and the merchandise inventory on June 30 is $45,985, what is the store's gross profit?

Sales minus cost of goods sold equal gross profit.

Answer: $24,931


I thank you for your reply.

Answer
Hi,

Gross profit = sales - cost of goods

Sales = 66071

Cost of goods = purchases for the 3 month period + change in the value of inventory during that period

Cost of goods = 39642 + (47483-45985) = 39642 + 1498 = 41140

Gross profit = 66071 - 41140 = $24,931

Let me know if you have any questions.

Bobby