Bonita Industries had the following information at December 31: Finished goods inventory, January 1 $ 70000 Finished goods inventory, December 31 150000 If the cost of goods manufactured during the year amounted to $2200000 and annual sales were $2750000, the amount of gross profit for the year is

Gross Profit 630,000

Explanation:

Gross Profit: Is the amount remaining from the sales revenue after the cost of goods.

The formula for Gross profit will be:

sales revenue - cost of goods sold = gross profit

To get the cost of good sold we will solve it through the inventory identity:

Beginning + cost f goods manufactured = ending + COGS

the left side are the income of units, while the right side the destination of the units. A unit can be either be sold or keep at inventory.

70,000 + 2,200,000 = 150,000 + COGS

2,270,000 - 150,000 = COGS = 2,120,000

Then we move to the gross profit formula:

Sales Revenue 2,750,000

COGS (2, 120,000)

Gross Profit 630,000