Respuesta :
In this case we shall assume that the organisation makes sales only on account, as information on cash sales is not given in the problem. Thus going as per this assumption, The total sales amount to $5000, and Expenses amount to $2100. Thus, net income can be found using the below formula:
Net Income= Revenue- Expense
Net Income= $5000-$2100
Net Income=$2900
The net income for the period is $2,900.
Further Explanation:
Gross Profit: It is defined as the profit that a company earns after reducing the costs that are related to manufacturing and selling the products, or providing the services.
Net income: Net income is defined as the income earned by the company in a particular year. It is computed by subtracting the expenses for the particular year from the revenue of that particular year. Net income is added to the capital account of the company in the ending period.
Given information:
- Revenue on the account is $5,000.
- The cash collections of accounts receivable are $2,300.
- Expenses for the period is $2,100.
- The company paid dividends is $450.
Items to be considered to compute the net income for the period:
- Revenue on the account and the expenses for the period are only considered while calculating the net income.
- The cash collections of accounts receivable and the company paid dividends are not considered while calculating the net income because it is already included in the revenue and expenses respectively.
Computation of net income:
Net income for the period = Revenue on the account - Expenses for the period
= $5,000 - $2,100
= $2,900
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Answer details:
Grade: Middle School
Subject: Accounting
Chapter: Income statement
Keywords:
revenue, cash collections, income statement, expenses, a particular period, accounts receivable, net income, considered, calculating, subtracting, variable costing.
