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Homework answers / question archive / The following relate to Farr Corporation for the month of April : Sales Revenue $140,000Gain on the Sale of Land $20,000Cost of Goods Sold $75,000Tax Expense $14,000Advertising Expense $10,000Dividends Paid $7,000Loss on Lawsuit $24,000a
The following relate to Farr Corporation for the month of April : Sales Revenue $140,000Gain on the Sale of Land $20,000Cost of Goods Sold $75,000Tax Expense $14,000Advertising Expense $10,000Dividends Paid $7,000Loss on Lawsuit $24,000a. Determine Farr’s gross profit for the month of April.b. Determine Farr’s net income for the month of April.c. If retained earnings at the beginning of April were $1,500,000, whatwould retained earnings be at the end of April?
a. Determination of Farr's Gross profit for the month of April:
Gross profit
= Sales Revenue - Cost of goods sold
= $140000 - $75000
= $65000
b. Determination of Farr's Net income for the month of April:
Sales Revenue | $140000 |
Less: Cost of goods sold | ($75000) |
Gross profit | $65000 |
Less: Operating expenses | |
Advertising expense | ($10000) |
Loss on lawsuit | ($24000) |
Operating income | $31000 |
Add: Other incomes | |
Gain on sale of land | $20000 |
Net operating income | $51000 |
Less: Tax expense | ($14000) |
NET INCOME | $37000 |
c. Retained Earnings balance at the end of the month, April:
Retained Earnings, Beginning balance | $1500000 |
Add: Net income | $37000 |
Subtotal | $1537000 |
Less: Dividends paid | ($7000) |
Retained Earnings, Ending balance | $1530000 |