Pandora Corporation operates several factories in the Midwest that manufacture consumer electronics. The December 31, 2021, year-end trial balance contained the following income statement items:. Account Title Debits Credits
Sales revenue $ 14,200,000
Interest revenue 67,000
Loss on sale of investments $ 117,000
Cost of goods sold 6,370,000
Selling expenses 637,000
General and administrative expenses 1,690,000
Interest expense 57,000
Research and development expense 1,370,000
Income tax expense 917,000
Required:Calculate the company's operating income for the year.

Pandora Corporation

Income Statement for the year ended December 31, 2021

Sales revenue                                                   $ 14,200,000

Less Cost of goods sold                                    ($6,370,000)

Gross Profit                                                          $7,830,000

Less Operating Expenses :

Selling expenses                                                  ($637,000 )

General and administrative expenses              ($1,690,000 )

Research and development expense               ($1,370,000)

Operating Net Income/(loss)                               $4,133,000

Explanation:

Operating Income is the profit that a firm derives from its Primary operating activities.

This excludes incomes and losses generated from other Secondary sources.

For this question the Secondary sources excluded are : Interest revenue, Loss on sale of investments, Interest expense and Income tax expense.

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