The following totals appear in the day books for March 20X8.
$
Sales day book 40,000
Purchases day book 20,000
Returns inwards day book 2,000
Returns outward day book 4,000
Opening and closing inventories are both $3,000. What is the gross profit for March 20X8?
A $22,000
B $24,000
C $20,000
D $18,000

To calculate the gross profit for March 20X8, we need to follow these steps:

1. **Calculate Sales Revenue**:  
   Sales Revenue = Total from Sales Day Book = \$40,000

2. **Calculate Cost of Goods Sold (COGS)**:  
   COGS = Opening Inventory + Purchases - Closing Inventory - Returns Outwards + Returns Inwards  
   - Opening Inventory = \$3,000  
   - Purchases = Total from Purchases Day Book = \$20,000  
   - Closing Inventory = \$3,000  
   - Returns Outwards = Total from Returns Outwards Day Book = \$4,000  
   - Returns Inwards = Total from Returns Inwards Day Book = \$2,000

   So,  
   COGS = \$3,000 + \$20,000 - \$3,000 - \$4,000 + \$2,000  
   COGS = \$18,000

3. **Calculate Gross Profit**:  
   Gross Profit = Sales Revenue - COGS  
   Gross Profit = \$40,000 - \$18,000  
   Gross Profit = \$22,000

Thus, the correct answer is **A) $22,000**.

Would you like further details or have any questions?

Here are five related questions to expand your understanding:
1. What would the gross profit be if the closing inventory was \$5,000 instead of \$3,000?
2. How does the return inwards impact the calculation of sales revenue?
3. What is the difference between gross profit and net profit?
4. How do changes in purchase costs affect the gross profit?
5. Why is it important to calculate the cost of goods sold accurately?

**Tip:** Remember that gross profit only considers the direct costs associated with producing goods or services, not other expenses like rent or salaries.

Learn how to calculate gross profit for March 20X8 using data from sales, purchases, returns inwards, and returns outwards. Includes step-by-step solution and formula for cost of goods sold (COGS).

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