Gross profit



Q13. Gross profit
Entity A sold 200 units of merchandise in cash at a selling price of $50 per unit. Entity A purchased merchandise at $40 per unit before.
What is the amount of gross profit from this sale?

A13. Gross profit is measured by subtracting the cost of goods sold from sales revenue.

(1) To record sales revenue

  Debit Credit
Cash 10,000  
     Sales revenue   10,000

[Note]
Sales revenue = 200 units x $50 = $10,000

(2) To record the cost of goods sold

  Debit Credit
Cost of goods sold 8,000  
     Merchandise   8,000

[Note]
Cost of goods sold = 200 units x $40 = $8,000

(3) Gross profit = Sales revenue – Cost of goods sold
= $10,000 – $8,000 = $2,000

(4) Gross profit ratio = Gross profit / Sales revenue
= $2,000 / $10,000 = 0.20 = 20%

© AccountingInfo.com