Question

(LO 6)

E4-7

(Income Statement Items)

Certain account balances follow for Vincenti Products Corp.:

Rent revenue	$  8,500	Sales discounts	$ 17,800
Interest expense	2,700	Selling expenses	79,400
Beginning retained earnings	114,400	Sales revenue	490,000
Ending retained earnings	74,000	Income tax expense	100
Dividend revenue	91,000	Cost of goods sold	384,400
Sales returns and allowances	22,400	Administrative expenses	82,500

Instructions

Based on the balances, calculate the following:

(a)  

Total net revenue,

(b)  

Net income or loss

(c)  

Dividends declared during the current year

Answer 1

Answer

a calculation of net revenue

Particulars	$
Sales revenue	490,000
Less sales return and allowances	(22,400)
Less sales discount	(17,800)
Add Dividend revenue	91,000
Add rent revenue	8,500
Net revenue	549,300

Net revenue is $549,300.

b calculation of net income

Particulars	$	$
Total net revenue		549,300
Less expenses:
Selling expenses	79,400
Administrative expense	82,500
Interest expense	2,700
Cost of goods sold	384,400
Income tax expense	100
Total expenses		549,100
Net profit		200

$200 is net profit.

C Dividend = (Beginning retained earnings + net profit) - ending retained earnings

Dividend = (114,400 + 200) - 74,000 = $40,600

Dividend declared during the year is $40,600.

Rent revenue and dividend revenue are other revenues except sales revenue taken for computing total net sales.

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