Question

Sparty Corporation has provided the following information for its most recent year of operation: Revenues earned were $88,000, of which $8,000 were uncollected at the end of the year. Operating expenses incurred were $39,000, of which $8,000 were unpaid at the end of the year. Dividends declared were $12,000, of which $1,000 were unpaid at the end of the year. Income tax expense is $18,130. What is the amount of net income reported on Sparty's income statement

Answer 1

The amount of net income reported on Sparty's income statement is $19,690.

What is revenue?

• The total amount of income earned by the sale of goods and services connected to the principal operations of the firm is referred to as revenue in accounting.
• Commercial revenue is often known as sales or turnover.
• Some businesses make money by charging interest, royalties, or other fees.

What are dividends?

• A dividend is a profit distribution made by a corporation to its shareholders.
• When a corporation makes a profit or has a surplus, it can pay a portion of the earnings to shareholders as a dividend.
• Any money that is not dispersed is re-invested in the company.

Solution -

To find the amount of net income reported on Sparty's income statement, use the following formula:

Net Income = Gross Profit — Operating Expenses — Other Business Expenses — Taxes — Interest on Debt + Other Income

Net income = 80000 - 31000 - 11000 - 18130 = 19690

Therefore, the amount of net income reported on Sparty's income statement is $19,690.

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