During the current year, merchandise is sold for $981,000. The cost of merchandise sold sold is $588,600.
a. What is the amount of the gross profit? $
b. Compute the gross profit percentage (gross profit divided by sales). Round to the nearest whole number. %
c. When will the income statement report net income?
A) Net Sales - COGS = Gross profit; ($981,000 - 588,600) = $392,400
B) Gross profit % = Gross profit / Net Sale = ($392,400 / 981,000) = 40%
C) Income statement will report Net income when operating expenses are less than gross profit
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