The following facts pertain to Alameda Corporation for 20x5: Based on the above facts,net income for 20x5 for Alameda Corporation amounted to

Question

The following facts pertain to Alameda Corporation for 20x5:  Based on the above facts,net income for 20x5 for Alameda Corporation amounted to

Quizplus · Accepted Answer

Net income is calculated as gross profit minus operating expenses plus other income. In this case, gross profit is $645,000 (sales revenue minus cost of goods sold), operating expenses are $312,500 (selling, general and administrative expenses plus depreciation), and other income is $20,000. Therefore, net income is $645,000 - $312,500 + $20,000 = $352,500. However, we know from the statement of retained earnings that dividends of $120,000 were declared, so net income for the year is actually $232,500 ($352,500 - $120,000).

The Following Facts Pertain to Alameda Corporation for 20x5