During the current year, merchandise is sold for $707,000. The cost of the goods sold is $395,920.

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?

The net income is $495,000

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

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

None of these answers is correct.