Question

In 2018, Alpha Company had $48,000,000 in Sales/Revenues, $15,500,000 in Costs of Goods Sold (COGS), $3,600,000...

In 2018, Alpha Company had $48,000,000 in Sales/Revenues, $15,500,000 in Costs of Goods Sold (COGS), $3,600,000 in Sales, General, and Administrative (SG&A) expenses, $1,200,000 in Depreciation expenses, $550,000 in interest payment, and $4,125,000 in taxes. The firm also paid $1,900,000 in dividends to shareholders that year. By how much did Alpha Company's Retained Earnings increase in 2018? What was Alpha Company's gross income in 2008?

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Answer #1

The amount of increase in retained earnings is computed as shown below:

= Sales - Cost of goods sold - Sales, general and administrative expense - depreciation expense - Interest expense - taxes - dividend paid

= $ 48,000,000 - $ 15,500,000 - $ 3,600,000 - $ 1,200,000 - $ 550,000 - $ 4,125,000 - $ 1,900,000

= $ 21,125,000

Gross income is computed as shown below:

= Sales - Cost of goods sold

= $ 48,000,000 - $ 15,500,000

= $ 32,500,000

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