At the beginning of the year, Novak had an inventory of $550000. During the year, the company purchased goods costing $2340000. If Novak reported ending inventory of $970000 and sales of $2920000, their cost of goods sold and gross profit rate would be $1920000 and 65.75%. $1920000 and 34.25%. $1370000 and 65.75%. $1550000 and 34.25%.

B. $1,920,000 and 34.25%.

Explanation:

                    Novak Company

             Income Statement (Partial)

Sales Revenue                                    $2,920,000

Less: Cost of goods sold

Beginning inventory           $550,000

Add: Purchase                  $2,340,000

Goods available for sale  $2,890,000

Less: Ending Inventory      ($970,000)

Cost of goods sold                                  $1,920,000

Gross profit                                              $1,000,000

We know, gross profit margin = (Gross profit ÷ Sales Revenue) × 100

gross profit margin = ($1,000,000 ÷ $2,920,000) × 100

gross profit margin = 0.3425 × 100

Therefore, gross margin = 34.25%

So, option B is the answer.