During August, 2018, Baxter's Supply Store generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter's operating income for the month of August, 2018 is

Question

Quizplus · Accepted Answer

Operating income is calculated as total revenues minus cost of goods sold and operating expenses. Thus, $60,000 (revenues) - $36,000 (cost of goods sold) - $4,000 (operating expenses) = $20,000. Rent revenue and gain on sale are not included in operating income.

During August, 2018, Baxter's Supply Store Generated Revenues of $60,000