The following information has been provided by Hable Company: Advertising expense $9,000; Interest expense $4,000; Rent expense for store $11,000; Loss on sale of property and equipment $6,800; Cost of goods sold $22,400; Depreciation expense $8,200; Prepaid insurance expense $1,000. How much were Hable’s total expenses in calculating operating income? $57,400 $54,600 $61,400 $42,400
(Solved): The following information has been provided by Hable Company: Advertising expense $9,000; Interest expense $4,00
Expert Answer
Operating expenses are expenses which are incurred by a business in the normal course of its operations. These include cost of goods sold, selling, administrative expenses and the like but does not include interest expenses. Prepaid expenses are not expenses but a part of current assets
So, following expenses are included in operating expenses
Advertising expense + Rent expense for store + Loss on sale of property and equipment + Cost of goods sold + Depreciation expense
= $9,000 + $11,000 + $6,800 + $22,400 + $8,200
= $57,400
So, as per above calculations, option A is the correct option
