Question

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			$	12,500,000
Interest revenue				50,000
Loss on sale of investments	$	100,000
Cost of goods sold		6,200,000
Selling expenses		620,000
General and administrative expenses		1,520,000
Interest expense		40,000
Research and development expense		1,200,000
Income tax expense		900,000

Answer 1

• Solution :

Operating income for the year

Sales revenue	$12,500,000
Total Operating Revenues		$12,500,000
Less : Operating Expenses:
:  Cost of goods sold / Cost of Sales	$6,200,000
:    Selling expenses	$620,000
:   General and Administration expenses	$1,520,000
:  Research and Development expenses	$1,200,000	$95,40,000
Operating Income [ $12,500,000 - $95,40,000 ]		2,960,000

• Sales revenue -  Cost of goods sold = Gross Profit
• $12,500,000 -   $6,200,000 = 6,300,000

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