Question

The following data applies for Question 2 and Question 3: Listed below are selected account balances for Wahl Company for the year ended December 20XX: Selling expenses Interest expense Cost of goods sold Administrative expenses Sales Rent revenue $380,000 15,000 3,800,000 580,000 5,850,000 16,600 Chapter 5 Question 2: (1 point) Required: Calculate the amount of the operating income. Omit $ signs. Chapter 5 Question 3: (1 point) Required: Calculate the amount of the net income. Omit $ signs.

Answer 1

1) Calculation of the amount of operating income Sales Less: Cost of goods sold Gross Profit Less: Selling expenses Administrative expenses operating Income (Amount in $) 5850000 (3800000) 2050000 380000 580000 (960000) 1090000 2) Calculation of the amount of net income Operating income Add: Rent revenue Less: Interest expenses Net income (Amount in $) 1090000 16600 (15000) 1091600 Note: Rent revenue is treated as indirect income