Gross Profit = Sales - Cost of Goods Sold

Steps:

• Sales revenue = total receipts from customers = $85,000.
• Opening inventory = $0 (first year of trading).
• Purchases = total payments to suppliers = $60,000.
• Cost of goods sold (COGS) = opening inventory + purchases - closing inventory = $0 +$60,000 - $15,000 =$45,000.
• Gross profit = sales - COGS = $85,000 -$45,000 = $40,000.

Why none of the options is correct:

• Calculated gross profit is $40,000 using standard formula, but not listed.

Why the others are wrong:

• A. $10,000: Subtracts closing inventory from payments incorrectly; closing reduces COGS.
• B. $15,000: Matches closing inventory value, unrelated to profit.
• C. $25,000: Sales minus purchases only, ignores closing inventory adjustment to COGS.
• D. $45,000: Equals COGS amount, not gross profit.

Final answer: $40,000