During August 2020, Shelby's Supply Store generated net sales of $65,000. The company's expenses were as follows: cost of goods sold of $33,000 and operating expenses of $7,000. The company also had rent revenue of $2,000 and a loss on disposal of plant assets of $3,000. Shelby's operating income for the month of August 2020 is

Question

Quizplus · Accepted Answer

Operating income is calculated as net sales minus cost of goods sold and operating expenses. Therefore, $65,000 (net sales) - $33,000 (cost of goods sold) - $7,000 (operating expenses) = $25,000. Rent revenue and loss on disposal of plant assets are not included in operating income.

During August 2020, Shelby's Supply Store Generated Net Sales of $65,000