Question

A company reports the following amounts at the end of the current year:
Sales revenue $860,000
Selling expenses $250,000
Gain on the sale of land $30,000
Interest expense $10,000
Cost of goods sold $520,000
Required:
1. Under normal circumstances (ignoring tax effects), permanent earnings would be computed as ________.

Answer 1

Answer:

The answer is $80,000

Explanation:

To start with, what is a permanent earning? - Permanent earnings are earnings that are still being generated from a company's continuing operations.

In this question, it is calculated as :

Sales revenue minus cost of sales minus selling expenses minus interest expense.

So we have:

$860,000 - $520,000 - $250,000 - $10,000

=$80,000