Alejandro Alvera of Alvear Corp was reading the financial statements of Olivas Medical Supply Company to decide whether he wanted to try to acquire the company. He noticed some mistakes in the Olivas Income Statement:($ millions)Year ended 12/31/2015Sales revenue$1600Interest Revenue50Total Revenue1650Cost of Goods Sold(800)Gross Profit850SG&A Expense(400)Interest Expense(50)Operating Income400Gain on sale of equipment200Pre-tax income600Income Tax Expense(216)Net Income384What is Olivas' Operating Income for the year ended 12/31/2015 after correcting the mistakes?a) $600b) $350c) $400d) $550e) $450

Operating income in the business means income after taking all operating income and all operating…

Answered: Alejandro Alvera of Alvear Corp was…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alejandro Alvera of Alvear Corp was reading the financial statements of Olivas Medical Supply Company to decide whether he wanted to try to acquire the company. He noticed some mistakes in the Olivas Income Statement:

($ millions)	Year ended 12/31/2015
Sales revenue	$1600
Interest Revenue	50
Total Revenue	1650
Cost of Goods Sold	(800)
Gross Profit	850
SG&A Expense	(400)
Interest Expense	(50)
Operating Income	400
Gain on sale of equipment	200
Pre-tax income	600
Income Tax Expense	(216)
Net Income	384

What is Olivas' Operating Income for the year ended 12/31/2015 after correcting the mistakes?

a) $600

b) $350

c) $400

d) $550

e) $450

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