Question

At the beginning of the year, Uptown Athletic had an inventory of $640000. During the year, the company purchased goods costing $2020000. If Uptown Athletic reported ending inventory of $960000 and sales of $3440000, their cost of goods sold and gross profit rate would be:

Answer 1

Cost of Goods Sold = $1,700,000

Gross Proft = $1,740,000

Step-by-step explanation:

We solve this assingemtn using the inventory identity:

`$$Beginning Inventory + Purchase = Ending Inventory + COGS`

We post the given and solve for the missing part:

640,000 + 2,020,000 = 960,000 + COGS

COGS = 640,000 + 2,020,000 - 960,000 = 1,700,000

Next we use the COGS value to calculate the gross profit.

`Sales \: Revenues- \: COGS = \: Gross \: Profit`

3,440,000 - 1,700,000 = 1,740,000