Answer:
a. $85,000
b. $13,000
Explanation:
The movement in the balance of inventory at the beginning and ending balance is as a result of purchases and sales. This may be expressed mathematically as
opening balance + purchases - cost of goods sold = ending inventory
Given that Inventory that had cost $85,000 was sold on account for $99,000. Hence, the cost of goods sold is $85,000.
Gross profit is the difference between the sales and cost of goods sold.
Gross profit = $99,000 - $85,000
= $13,000
