2E
Question
Presented below is information related to Viel Company at December 31, 2017, the end of its first year of operations.
Sales revenue \(310,000
Cost of goods sold \)140,000
Selling and administrative expenses \(50,000
Gain on sale of plant assets \)30,000
Unrealized gain on available-for-sale investments \(10,000
Interest expense \)6,000
Loss on discontinued operations \(12,000
Dividends declared and paid \)5,000
Instructions
Compute the following: (a) income from operations, (b) net income, (c) comprehensive income, and (d) retained earnings balance at December 31, 2017. (Ignore income tax effects.)
Step-by-Step Solution
VerifiedThe retained earnings balance on December 31, 2017, was $127,000.
Net income refers to the total income minus all operating expenses, interest expenses, selling and other expenses, and depreciation expenses. The amount is treated as net income for an individual or company.
| Viel Company | |
| Income Statement | |
| For the Year Ended December 31, 2017 | |
Sales Revenue | $310,000 |
Less: Cost of Goods Sold | ($140,000) |
Gross Profits | $170,000 |
Less: Selling and Administrative expenses | ($50,000) |
Income From Operations | $120,000 (A) |
Other Income and Expenses |
|
Add: Gain on sale of plant assets | $30,000 |
Total Income | $150,000 |
Less: Financing Costs | $6,000 |
Income from Continued Operations | $144,000 |
Less: Loss on discontinued operations | ($12,000) |
Net Income | $132,000 (B) |
Add: Unrealized gain on available for sale securities | $10,000 |
Comprehensive Income | $142,000 (C) |
|
|
Retained earnings as of December 31, 2017 |
|
Net Income | $132,000 |
Less: Dividends declared and paid | $5,000 |
Retained Earnings as of December 31, 2017 | $127,000 (D) |