The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | }
\hline \text { Purchases } & \$ 126,000 \
\hline \text { Selling and Administrative Expenses } & 90,000 \
\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \
\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \
\hline \text { Sales Revenue } & 250,000 \
\hline
\end{array}$$ What is the operating income for 2009?
A) $250,000
B) $140,000
C) $30,000
D) $90,000

Question

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } 
\hline \text { Purchases } & \$ 126,000 \
\hline \text { Selling and Administrative Expenses } & 90,000 \
\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \
\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \
\hline \text { Sales Revenue } & 250,000 \
\hline
\end{array}$$ What is the operating income for 2009?
A) $250,000
B) $140,000
C) $30,000
D) $90,000

Quizplus · Accepted Answer

Operating income is calculated as Sales Revenue minus Cost of Goods Sold (COGS) and Selling and Administrative Expenses. COGS is calculated as: Beginning Inventory + Purchases - Ending Inventory = $14,000 + $126,000 - $10,000 = $130,000. Operating Income = $250,000 - $130,000 - $90,000 = $30,000.

The Following Information Pertains to Bright Toy Company's Operating Activities