JCS Incorporated experienced the following transactions during its first year of business. The company purchased $16,000 of merchandise from Kent Company. The company paid $2,000 for selling and administrative expenses and purchased land for $5,000. All of the merchandise purchased was sold for $30,000 cash. What is the company’s gross margin?
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Answered on
The gross margin is calculated as the difference between net sales revenue and the cost of goods sold.
Given the information provided:
- Net sales revenue = $30,000 (from the sale of merchandise)
- Cost of goods sold (COGS) = Cost of merchandise purchased = $16,000
To find the gross margin:
Gross Margin = Net Sales Revenue - Cost of Goods Sold
Gross Margin = $30,000 - $16,000
Gross Margin = $14,000
Therefore, the company's gross margin is $14,000.