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Answer:
Kyle Company Profitability Analysis
1. Net Sales
Net sales represent the total revenue from sales after accounting for discounts, returns, and allowances. Here's the calculation:
Net Sales = Sales - Sales Discounts - Sales Returns and Allowances
Net Sales = $6,000,000 - $48,000 - $27,000
Net Sales = $5,925,000
2. Cost of Goods Sold (COGS)
COGS represent the direct costs associated with the goods sold during the year. We need to consider the beginning inventory, purchases, purchase adjustments, and ending inventory.
First, calculate the net purchases:
Net Purchases = Purchases - Purchase Discounts - Purchase Returns and Allowances
Net Purchases = $3,225,000 - $90,000 - $45,000
Net Purchases = $3,090,000
Now, apply the cost of goods sold formula:
COGS = Beginning Inventory + Net Purchases - Ending Inventory
COGS = $300,000 + $3,090,000 - $345,000
COGS = $3,045,000
3. Gross Profit
Gross profit represents the profit earned after deducting the direct cost of producing or acquiring the goods sold. Here's the calculation:
Gross Profit = Net Sales - COGS
Gross Profit = $5,925,000 - $3,045,000
Gross Profit = $2,880,000
Therefore:
Net Sales: $5,925,000
Cost of Goods Sold: $3,045,000
Gross Profit: $2,880,000
Step-by-step explanation: