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25 November, 10:38

Gannon Company had the following information at December 31: Finished goods inventory, January 1$50,000 Finished goods inventory, December 31150,000 If the cost of goods manufactured during the year amounted to $2,200,000 and annual sales were $2,750,000, the amount of gross profit for the year is.

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  1. 25 November, 10:43
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    = $ 650,000.

    Explanation:

    Gross profit is the profit made after subtracting the cost of the goods were sold (cost of inputs) to generate the revenue.

    Gross profit = Revenue - cost of sales

    Cost of sales = opening inventory + production cost - closing inventory

    Cost of sales = 50,000 + 2,200,000 - 150,000

    = $2,100,000.

    Gross profit = $2,750,000 - $2,100,000.

    = $ 650,000.
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