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7 June, 07:43

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 sold140,000

Selling and admin expenses50,000

Gain on sale of plant assets30,000

Unrealized gain on available-for-sale investments10,000

Interest expense6,000

Loss on discontinued operations12,000

Dividends declared and paid5,000

Compute the following:

(a) income from operations

(b) net income

(c) comprehensive income

(d) retained earnings balance at December 31, 2017. (Ignore income tax effects.)

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Answers (1)
  1. 7 June, 11:09
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    a. The computation of the income from operations is shown below:

    = Sales revenue - Cost of goods sold - Selling and admin expenses

    = $310,000 - $140,000 - $50,000

    = $120,000

    b. The computation of the net income is shown below:

    = Income from operations + Gain on sale of plant assets - interest expenses - Loss on discontinued operations

    = $120,000 + $30,000 - $6,000 - $12,000

    = $132,000

    c. The computation of the comprehensive income is shown below:

    = Net income + unrealized holding loss on these securities

    = $132,000 + $10,000

    = $142,000

    d. The computation of the ending retained earning balance is shown below:

    = Net income - Dividends declared and paid

    = $132,000 - $5,000

    = $127,000
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