### Financial Accounting Problem: Gross Profit CalculationSelling, general, and administrative expenses were $80,000; net sales were $390,000; interest expense was $16,000; research and development expenses were $34,000; net cash provided by operating activities was $42,000; income tax expense was $10,000; cost of goods sold was $220,000.**Question:**Gross profit for the period was:a. $170,000. b. $390,000. c. $56,000. d. $90,000. **Explanation:**To calculate the gross profit, use the following formula:\[ \text{Gross Profit} = \text{Net Sales} - \text{Cost of Goods Sold} \]From the data provided:- Net Sales = $390,000- Cost of Goods Sold = $220,000Therefore,\[ \text{Gross Profit} = \$390,000 - \$220,000 = \$170,000 \]### Correct Answer:- **a. $170,000****Note:** Make sure to disregard other expenses listed (selling, general, and administrative expenses, interest expense, research and development expenses, net cash provided by operating activities, and income tax expense) as they are not part of the gross profit calculation but are relevant for net profit and cash flow analyses.**References:**- Financial Accounting Textbooks- Online Educational Resources on Financial Statements and Profit Calculation

Gross Profit = Net Sales - Cost of goods sold

Selling, general, and administrative expenses were $80,000; net sales were $390,000; interest expense was $16,000; research and development expenses were $34,000; net cash provided by operating activities was $42,000; income tax expense was $10,000; cost of goods sold was $220,000. Gross profit for the period was: O a. $170,000. O b. $390,000. O c. $56,000. O d. $90,000.

Selling, general, and administrative expenses were $80,000; net sales were $390,000; interest expense was $16,000; research and development expenses were $34,000; net cash provided by operating activities was $42,000; income tax expense was $10,000; cost of goods sold was $220,000. Gross profit for the period was: O a. $170,000. O b. $390,000. O c. $56,000. O d. $90,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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