The Willie Company has provided the following information: Operating expenses were $355,000; Income from operations was...
The Willie Company has provided the following information:
Operating expenses were $355,000;
Income from operations was $230,000;
Net sales were $1,300,000;
Interest expense was $75,000;
Loss from sale of investments was $83,000;
Income tax expense was $62,000.
What was Willie's gross profit?
Homework Answers
answer: $585,000
Gross profit is usually computed by deducting cost of goods sold
from net sales but because cost of goods sold was not provided, we
have to begin part way down the income statement to compute gross
profit
Net sales 1,300,000
Gross profit ?
Operating expenses 355,000
Income from operations 230,000
We can add back operating expenses to the income from operations
(reverse the mathematical function as we normally "deduct"
operating expenses to derive income from operations) to back into
gross profit which equals $585,000 (i.e, 355000 + 230000)
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