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?

Business · College · Mon Jan 18 2021

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.

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