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Quiz 2 Answers and Explanations 1. Lantz Company has provided the following information: Cash sales totaled $255,000. Credit sales totaled $479,000.
Quiz 2 Answers and Explanations 1. Lantz Company has provided the following information: Cash sales totaled $255,000. Credit sales totaled $479,000. Cash collections from customers for services yet to be provided totaled $88,000. A $22,000 loss from the sale of property and equipment occurred. Interest income was $7,700. Interest expense was $19,900. Cost of goods sold was $336,000. Rent expense was $36,000. Salaries expense was $49,000. Other operating expenses totaled $79,000. Unearned revenue was $4,000
Lantz's
Operating revenues = $734,000 = $255,000 + $479,000.
Operating expenses = $500,000 = $336,000 + $36,000 + $49,000 + $79,000.
Operating income = $234,000 = $734,000 - $500,000. Income before taxes = $199,800 = $234,000 - $22,000 + $7,700 - $19,900.
Question: Shouldn't Interest expense part of operation expense?
According to textbook: Operating activities includes interests earnings and payments on investments.
