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

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

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.7IP

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Question

($ 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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