Determining Gross Profit

During the current year, merchandise is sold for $849,000. The cost of the goods sold is $475,440.

a. What is the amount of the gross profit?

b. Compute the gross profit percent. Round to the nearest whole number. _______%

c. Which of the following is true, based on the above information?

1. The net income is $495,000.

2. The company may have a net income or net loss depending upon the amount of operating expenses

. 3. If operating expenses are greater than gross profit, there will be a net income

. 4. None of these answers is correct.