Question

Based on the Income Statement of The Clothing Outlet Inc., provide the total Operating Income for the 12-month period ending December 31, 2017.

The following account balances are available for The Clothing Outlet, Inc., a discount retailer, as of and for the year ended December 31, 2017, except for the retained earnings balance which is stated below as of January 1, 2017: Cash………………………………..….$5,500,000 Accounts receivable……………………...$9,000,000 Marketable securities….……………..…$14,000,000 Prepaid insurance……..……………..……$400,000 Inventory………………..………………$4,000,000 Equipment………………..……………..$7,000,000 Accumulated depreciation: equipment….$3,000,000 Buildings……………………………….$20,700,000 Accumulated depreciation: buildings…...$5,000,000 Land…………………………………....$4,000,000 Investments (long-term)………………..$4,000,000 Patents (net)……………………………....$800,000 Accounts payable…………………..……$5,000,000 Income taxes payable……………………$1,600,000 Salaries payable…………………………$1,000,000 Dividends payable….……………………$2,000,000 Interest payable…….……….……………..$500,000 Notes payable (long-term)…..……….….$2,400,000 Bonds payable (long term)……….…….$6,000,000 Common stock………………………….$10,100,000 Retained Earnings (as of Jan. 1, 2017)...$8,400,000 Dividends declared………………………$5,000,000 Sales…………………………………….$108,000,000 Cost of goods sold………………………$32,600,000 Interest revenue…………………………$2,500,000 Interest expense…………………………$1,500,000 Income tax expense……(calculated @ 40%) Selling expenses: Sales salaries and commissions…………$6,000,000 Insurance expense………………………...$1,600,000 Advertising expense…………………........$3,500,000 Utilities expense…………………………..$4,000,000 Depreciation expense: equipment…………..$400,000 Delivery expense…………………………....$500,000 General and administrative expenses: Executive and administrative salaries……$5,800,000 Utilities expense…………………………...$4,200,000 Rental expense……………………………….$900,000 Depreciation expense: buildings…………….$500,000

Answer 1

	Particulars					Amount
	Sales					$ 108,000,000.00
Less:	Cost of Goods sold					$   32,600,000.00
	Gross Margin					$   75,400,000.00
Less:	Operating Expenses:
	General and administrative expenses:
	Executive and administrative salaries				$ 5,800,000.00
	Utilities expense				$ 4,200,000.00
	Rental expense				$    900,000.00
	Depreciation expense: buildings				$    500,000.00
	Total General and Adm. Expenses					$   11,400,000.00
	Selling expenses:
	Sales salaries and commissions				$ 6,000,000.00
	Insurance expense				$ 1,600,000.00
	Advertising expense				$ 3,500,000.00
	Utilities expense				$ 4,000,000.00
	Depreciation expense: equipment				$    400,000.00
	Delivery expense				$    500,000.00
						$   16,000,000.00
	Total Operating Income					$   48,000,000.00