Question

The Accounts Receivable balance for Southside Company on December 31, 2015, was $30,000. During 2016, Southside earned revenue of $456,000 on the account and collected $323,000 on the account. Southside had $133,000 in accounts receivable at the end of 2016.

Answer 1

The accounting profit of the firm is $50,000.

Step-by-step explanation:

The accounting profit of the firm can be calculated by subtracting the explicit costs from the total revenue. In this case, the total revenue is $1,000,000 and the explicit costs are $600,000 for labor, $150,000 for capital, and $200,000 for materials.

Therefore, the accounting profit is:

Accounting profit = Total revenue - Explicit costs

= $1,000,000 - ($600,000 + $150,000 + $200,000)

= $50,000