Toby's Farm Store Buys Portable Generators for $500 and Sells

question 56

Multiple Choice

Toby's Farm Store buys portable generators for $500 and sells them for $800.He pays a sales commission of 5% of sales revenue to his sales staff.Toby pays $2,000 a month rent for his store,and also pays $1,800 a month to his staff in addition to the commissions.Toby sold 200 generators in June.
- If Toby prepares a traditional income statement for the month of June,what would be his operating income?

• A)$ 72,000
• B)$ 48,200
• C)$ 60,000
• D)$160,000

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Definitions:

FDIC

The Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits in banks and thrift institutions for at least $250,000 per depositor, per bank.

Restrictive Indorsement

An endorsement on a negotiable instrument, like a check, that limits its use, such as specifying that the instrument must be deposited into a particular account.

Negotiates

The act of discussing something formally to reach an agreement, often in business or diplomatic discussions.

Collection System

A method or process used to gather or accumulate items, information, or debts from various sources.