8) A company made net sales revenue of $500,000, and cost of goods sold totaled
$300,000. Calculate its gross profit percentage.
9) Carpenter, Inc. generated sales revenues of $1,400,000 in 2019.
Its cost of goods sold
Calculate Carpenter's gross profit percentage.
10) What does the gross profit percentage measure?
How is it computed?
The gross profit percentage measures the profitability of each sales dollar above
the cost of goods sold.
Gross profit percentage equals gross profit divided by net sales
11) The gross profit percentage for Fran's Clothing Retailer was 37.7% for the year ended
December 31, 2018 and 42.5% for the year ended December 31, 2019.
average gross profit percentage, for both years, is 45.7%.
Briefly discuss these findings.
The gross profit percentage for Fran's Clothing Retailer has improved from 37.7
percent for 2018 to 42.5 percent for 2019. This shows that the gross profit earned from
merchandise inventory has increased and is providing more to cover the remaining
operating expenses and provide for net income.
This increase is a good step in reaching
the industry average. Fran's Clothing Retailer should work to continue this increase and to
keep operating expenses under control. These two actions will improve net income.
12) Bridgeport Enterprises reported the following figures from its adjusted trial balance for
its first year of business, which ended on June 30, 2019.
Cost of Goods Sold
Net Sales Revenue
Notes Payable, Long-term
Prepare a multi-step income statement.
Prepare the statement of retained earnings.
Prepare a classified balance sheet.
Compute the gross profit percentage.