A Retailer Has a Standard Mark-Up of 25% on Cost

question 108

Essay

A retailer has a standard mark-up of 25% on cost. For the month of June, the company recorded sales of $200,000 and purchases of $170,000. Inventory at the beginning of June was estimated to be $240,000.
Required:
Using the gross margin method, estimate the cost of goods sold for the month of June and the cost of inventory at the end of June.

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Definitions:

Corporate Taxes

Government levies on the earnings or profits generated by businesses.

Personal Tax Rate

The percentage of one's income that is paid to the government in taxes, which varies based on income level and jurisdiction.

Corporate Tax Rate

The tax imposed on the net income of a corporation, with rates varying by country and sometimes also by the level of income.

Leverage

Leverage refers to the use of borrowing (debt in capital structure) to amplify potential returns from an investment or project.