Question

Consider the following year-end information for Spitzer Corporation: Cost of goods sold $420,000 Sales revenue 800,000 Nonoperating expenses 10,000 Operating expenses 170,000 Income tax expense 80,000 What amount will Spitzer report for operating income

Answer 1

Answer:

$210,000

Explanation:

operating income or EBIT = net sales revenue - cost of goods sold - operating expenses

in this case:

EBIT = $800,000 - $420,000 - $170,000 = $210,000

net income = EBIT - non-operating expenses - income taxes = $210,000 - $10,000 - $80,000 = $120,000