Below is the accounts and their ending balance which are obtained from the Trial Balance for Linh Do Accounting Business in 2025.

Using this information, calculate the Net Profit for the Linh Do Accounting business.

Cash 37,291
Sales Revenue 236,697
Retained Earnings, beginning balance 25,000
Inventory 15,000
Accounts Payable 10,000
Contributed Capital 498,254
Buildings 57,390
Cost of Sales 113,590
Administration expenses 40,724
Dividends 54,205

Question

Below is the accounts and their ending balance which are obtained from the Trial Balance for Linh Do Accounting Business in 2025.

Using this information, calculate the Net Profit for the Linh Do Accounting business.

Cash	37,291
Sales Revenue	236,697
Retained Earnings, beginning balance	25,000
Inventory	15,000
Accounts Payable	10,000
Contributed Capital	498,254
Buildings	57,390
Cost of Sales	113,590
Administration expenses	40,724
Dividends	54,205

BlackTom AI · Accepted Answer

Begin by identifying the components that contribute to net profit on the income statement: Sales Revenue represents the total income from sales, while Cost of Sales (or Cost of Goods Sold) and Administration Expenses represent expenses.

Optionally, we examine other items for completeness: Dividends, Retained Earnings, Contributed Capital, and the balance sheet items (Cash, Inventory, Buildings, Accounts Payable) do not directly affect Net Profit for the period, though they are part of equity, assets, and liabilities. Dividends reduce retained earnings but are not an expense on the income statement, and beginning retained earnings is a prior-period figure, not a current-period expense.

To compute net profit, align revenue and expenses that pertain to the current period:
- Sales Revenue: 236,697
- Cost of Sales: 113,590
- Administration expenses: 40,724

Perform the subtraction step by step:
1) Subtract Cost of Sales from Sales Revenue: 236,697 − 113,590 = 123,107
2) Subtract Administration Expenses from the interim result: 123,107 − 40,724 = 82,383

The result aggregates the core operating performance for the period by accounting for the primary revenue and the direct and operating expenses associated with generating that revenue. Other items listed in the data, such as dividends or equity accounts, are not included in this calculation of Net Profit for the period because they affect equity or cash flows differently and are not recognized as operating expenses or revenues on the income statement.

Thus, when focusing on the income statement components provided, the arithmetic leads to the net profit figure derived from these specified elements.

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