Ask Question
6 January, 09:54

Skelton Brush Company sells standard hair brushes. The following information summarizes Skelton's operating activities for 2017. Selling and Administrative Expenses $44,000 Purchases 89,500 Net Sales Revenue 142,300 Merchandise Inventory, January 1, 2017 11,650 Merchandise Inventory, December 31, 2017 14,400 Calculate the operating income for 2017.

+4
Answers (1)
  1. 6 January, 11:21
    0
    The operating income for 2017 is $11,550

    Explanation:

    For computing the net income, first we have to calculate the cost of goods sold which is shown below:

    Cost of goods sold = Opening merchandise inventory + Purchase - Closing inventory

    = $11,650 + $89,500 - $14,400

    = $86,750

    Now, we know that if we deduct the cost of goods sold from sales, than gross profit is come.

    So, Sales - Cost of goods sold = Gross profit

    $142,300 - $86,750 = Gross Profit

    Gross Profit = $55,550

    Now deduct the Selling and Administrative Expenses from gross profit, so that net income can computed

    So, Gross profit - Selling and Administrative Expenses = Net income

    $55,550 - $44,000 = Net income

    Net income = $11,550

    Hence, the operating income for 2017 is $11,550
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Skelton Brush Company sells standard hair brushes. The following information summarizes Skelton's operating activities for 2017. Selling ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers