Question

Presented below is information related to Viel Company at December 31, 2020, the end of its fi rst year of operations.

Sales revenue $310,000
Cost of goods sold 140,000
Selling and administrative expenses 50,000
Gain on sale of plant assets 30,000
Unrealized gain on available-for-sale debt investments 10,000
Interest expense 6,000
Loss on discontinued operations 12,000
Dividends declared and paid 5,000

Compute the following:
a. income from operations
b. net income
c. comprehensive income
d. retained earnings balance at December 31, 2020.

Answer 1

a. income from operations = Revenue - Cost of Goods Sold - Selling and Administrative Expenses

Income from operations = 310,000 - 140,000 - 50,000

Income from operations = 120,000

b. net income = income from operations + gain on sale of plant assets - loss on discontinued operations - interest expense

Net income = 120,000 + 30,000 - 12,000 - 6,000

Net income = 132,000

c. comprehensive income = net income + unrealized gain on available-for-sale debt investments

Comprehensive income = 132,000 + 10,000

Comprehensive income = 142,000

d. retained earnings balance at December 31, 2020.

Retained earnings = Net Income - Dividends declared and paid

Retained Earnings = 132,000 - 5,000

Retained Earnings = 127,000