Question

The adjusted trial balance of Norton Company contained the following information. Assume the tax rate is 25%:

Debit Credit
Sales revenue $390,000
Sales returns and allowances $10,000
Sales discounts 5,000
Cost of goods sold 200,000
Operating expenses 110,000
Interest revenue 8,000
Interest expense 3,000


Required:
Compute income from operations.

a. $175,000
b. $65,000
c. $50,000
d. $70,000

Answer 1

b. $65,000

Step-by-step explanation:

Particulars Amount

Revenues

Service Revenue $390,000

Less: Sales Return and allowance $10,000

Less: Sales Discount $5,000

Net Sales Revenue $375,000

Less: Cost of Goods Sold $200,000

Gross Profit $175,000

Less: Operating Expenses $110,000

Operating Income $65,000

Thus, income from operation is $65,000