Lake Corporation reported the following amounts in its income statement: Sales revenue $ 440,000 Advertising expense 60,000 Interest expense 10,000 Salaries expense 55,000 Utilities expense 25,000 Income tax expense 45,000 Cost of goods sold 180,000 What was Lake's operating income? Multiple Choice $260,000. $180,000. $220,000. $120,000.

Question

Phillip Nichols

Business

5 June, 00:30

Lake Corporation reported the following amounts in its income statement: Sales revenue $ 440,000 Advertising expense 60,000 Interest expense 10,000 Salaries expense 55,000 Utilities expense 25,000 Income tax expense 45,000 Cost of goods sold 180,000 What was Lake's operating income? Multiple Choice $260,000. $180,000. $220,000. $120,000.

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Graves · Answer 1

=$120,000

Explanation:

Operating income is earnings before taxes and interests. It is Gross profits minus other expenses apart from taxes and interests.

Gross profits will be sales revenue - costs of goods sold.

= $440,000 - $180,000

=$260,000

Operating income will gross profit - (advertising + salaries + utilities)

= $260, 000 - (60,000 + 55,000 + 25,000)

=$260,000 - $140,000

=$120,000