Then we take off selling general and administrative expenses.
So these are the period costs, salaries and wages, legal fees, advertising and
building depreciation gives us total SG&A and then our operating income.
And operating income is the profitability of our core business was the pricing
of our product and service high enough to cover all the product costs for
our core business and all the period costs, and in this case it was.
Then below the operating income line, we have interest revenue and
interest expense.
We don't put interest revenue on the top line because our chore business is
not making loans, we're not a bank.
So we put a below operating income, and then interest expense typically goes below
operating income as well, that gives us free tax income.
We subtract income tax expense and we have a net income of 2,370.
One more thing I want to point out before we leave the income statement is I
separated depreciation expense into two buckets.
The metal detector depreciation expense is part of the direct cost of providing
the rental service, whereas the building depreciation is part of the selling and
administrative function.
And so you'll see this a lot where depreciation
may need to be put in two different categories
because it's going to show up in two different places on the income statement.