Question

Porches, Inc. sells lawn furniture. Selected financial information for the most recent year is as​ follows:Beginning merchandise inventory on January 1 was $33,200.Ending merchandise inventory on December 31 was $35,000.Purchases during the year were $92,000.Selling and administrative expenses were $75,700.Sales for year were $262,900.What was operating income for the​ year?

Answer 1

Answer:

The operating income for the​ year is $97,000

Explanation:

For computing the operating income, first, we have to calculate the cost of goods sold. The formula to compute the cost of good sold is shown below:

= Beginning merchandise inventory + Purchases during the year - Ending merchandise inventory

= $33,200 + $92,000 - $35,000

= $90,200

Now, the operating income would be

= Sales - the cost of good sold - selling and administrative expenses

= $262,900 - $90,200 - $75,700

= $97,000