LeGrand Corporation reported the following amounts in its income statement: $$\begin{array} { l r }
\text { Sales revenue } & \$ 440,000 \
\text { Advertising expense } & 60,000 \
\text { Interest expense } & 10,000 \
\text { Salaries expense } & 55,000 \
\text { Utilities expense } & 25,000 \
\text { Income tax expense } & 45,000 \
\text { Cost of goods sold } & 180,000
\end{array}$$ What was LeGrand's operating income?

Question

LeGrand Corporation reported the following amounts in its income statement: $$\begin{array} { l r } 
\text { Sales revenue } & \$ 440,000 \
\text { Advertising expense } & 60,000 \
\text { Interest expense } & 10,000 \
\text { Salaries expense } & 55,000 \
\text { Utilities expense } & 25,000 \
\text { Income tax expense } & 45,000 \
\text { Cost of goods sold } & 180,000
\end{array}$$ What was LeGrand's operating income?

Quizplus · Accepted Answer

Operating income is calculated as Sales Revenue minus Cost of Goods Sold and Operating Expenses (Advertising, Salaries, and Utilities). Thus, $440,000 - $180,000 - $60,000 - $55,000 - $25,000 = $120,000.

LeGrand Corporation Reported the Following Amounts in Its Income Statement