Skelton Brush Company sells standard hair brushes. The following information summarizes Skelton's operating activities for 2017. Selling and Administrative Expenses $44,000 Purchases 89,500 Net Sales Revenue 142,300 Merchandise Inventory, January 1, 2017 11,650 Merchandise Inventory, December 31, 2017 14,400 Calculate the operating income for 2017.

The operating income for 2017 is $11,550

Explanation:

For computing the net income, first we have to calculate the cost of goods sold which is shown below:

Cost of goods sold = Opening merchandise inventory + Purchase - Closing inventory

= $11,650 + $89,500 - $14,400

= $86,750

Now, we know that if we deduct the cost of goods sold from sales, than gross profit is come.

So, Sales - Cost of goods sold = Gross profit

$142,300 - $86,750 = Gross Profit

Gross Profit = $55,550

Now deduct the Selling and Administrative Expenses from gross profit, so that net income can computed

So, Gross profit - Selling and Administrative Expenses = Net income

$55,550 - $44,000 = Net income

Net income = $11,550

Hence, the operating income for 2017 is $11,550