Exercise 4-8 (Part Level Submission) Presented below are selected ledger account
ID: 2433521 • Letter: E
Question
Exercise 4-8 (Part Level Submission) Presented below are selected ledger accounts of Bonita Corporation as of December 31, 2017 Cash Administrative expenses Selling expenses Net sales Cost of goods sold Cash dividends declared (2017) Cash dividends paid (2017) Discontinued operations (loss before income taxes) Depreciation expense, not recorded in 2016 Retained earnings, December 31, 2016 Effective tax rate 30% $59,200 106,300 83,010 542,800 265,200 20,600 18,300 46,800 39,100 96,130 Compute net income for 2017 Net income LINK TO TEXT LINK TO TEXTExplanation / Answer
Total Expenses = COGS + Selling expenses = 265200 +83010 = 348210
Total Sales = 542800
Gross Income = 542800 - 348210 = 194590
Other expenses = Cash dividends paid + Discontinued operations
= 18300 + 46800 = 65100
We will not take cash dividend declared as it does not effect the net income until and unless it is paid bythe company.
Depreciation and retained earning do not form the part of the net income calculation in this
Final Gross income = 194590 - 65100 = 129490
Tax = 30%
Net Income = 0.7* 129490 = 90643
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