The accountant for Dolfin Corporation prepared the following income statement. The au#ditor has asked you to use this statement to provide additional information to Dolfin Corporation on the final Questions.


Screenshot 2024 01 09 171404

Screenshot 2024 01 09 171404

Step 1 of 2

In the problem, the income statement of ‘Dolfin’ is given that included sales for$320,840, cost of goods sold for $218,171, selling expenses $41,709, administrative expenses $35,292, interest expenses for 275.

Based on the given information, the operating expenses, gross profit and operating income is to be determined.

1) Operating Expenses: These are expenses incurred in the normal course of business operations, including Selling Expenses and Administrative Expenses.

2) Gross Profit: This is calculated by subtracting the Cost of Goods Sold (COGS) from Sales.

3) Operating Income: Also known as Earnings Before Interest and Taxes (EBIT), it is calculated by subtracting the Operating Expenses from the Gross Profit.

Explanation:

The given data will use in a way so that operating expenses, gross profit and operating income can be computed easily.

 

Step 2 of 2

1) To compute the operating expenses for “Dolfin”, it is needed to add the selling expenses and administrative expenses:

Operating Expenses =Selling expenses+Administrative expenses

Operating Expenses = $41,709+$35,292

Operating Expenses =$77,001

2) To compute the gross profit for “Dolfin” Corporation, subtract the cost of goods sold from the total sales:

Gross Profit = Sales−Cost of goods sold

Gross Profit =$320,840−$218,171

Gross Profit = $102,669

3) To compute the operating income for Dolfin Corporation, subtract the operating expenses (which is calculated in question 1) from the gross profit (which is calculated in question 2):

Operating Income = Gross Profit−Operating Expenses

Operating Income =$102,669−$77,001

Explanation:

Operating Expenses is calculated by adding the selling expenses and administrative expenses, gross profit is computed subtracting the cost of goods sold from the total sales and operating income is computed by subtracting the operating expenses from gross profit.

 

Final solution

1) Operating Expenses =$77,001

2) Gross Profit = $102,669

3) Operating Income =$25,668.

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