Question

"Salvadore Inc., a local retailer, has provided the following data for the month of September:

Merchandise inventory, beginning balance $ 42,700
Merchandise inventory, ending balance $ 42,100
Sales $268,300
Purchases of merchandise inventory $134,800
Selling expense $ 16,800
Administrative expense $ 57,600




The net operating income for September was:
1) 58,500
2) 134,500
3) 61,300
4) 133,500

Answer 1

To find the net operating income for Salvadore Inc., we calculate the COGS, subtract it from the sales to get the gross profit, and then subtract the total expenses from the gross profit, resulting in $58,500.

Step-by-step explanation:

The student has provided numerous amounts for a local retailer named Salvadore Inc. for the month of September, including beginning and ending merchandise inventory balances, sales, purchases, and expenses. To calculate the net operating income for September, we must apply the formula for calculating the gross profit and then subtract the selling and administrative expenses from it.

Calculation steps:

1. Calculate the Cost of Goods Sold (COGS): Beginning Inventory + Purchases - Ending Inventory = $42,700 + $134,800 - $42,100 = $135,400.
2. Calculate the Gross Profit: Sales - COGS = $268,300 - $135,400 = $132,900.
3. Calculate the Net Operating Income: Gross Profit - (Selling Expenses + Administrative Expenses) = $132,900 - ($16,800 + $57,600) = $132,900 - $74,400 = $58,500.

Therefore, the net operating income for Salvadore Inc. for the month of September was $1) $58,500.