The Callie Company has provided the following information: Operating expenses were $231,000;
Cost of goods sold was $376,000;
Net sales were $940,000;
Interest expense was $32,000;
Gain on sale of a building was $76,000;
Income tax expense was $151,000.
What was Callie's income before taxes?
A)$564,000.
B)$188,000.
C)$377,000.
D)$232,000.

Question

Quizplus · Accepted Answer

Income before taxes can be calculated by subtracting operating expenses, cost of goods sold, and interest expense from net sales and then adding any gains on sales and subtracting income tax expense.

Income before taxes = Net sales - Operating expenses - Cost of goods sold - Interest expense + Gain on sale of building - Income tax expense

= $940,000 - $231,000 - $376,000 - $32,000 + $76,000 - $151,000

= $226,000

Therefore, the correct answer is C) $377,000.

The Callie Company Has Provided the Following Information: Operating Expenses