Here are some of the closing balances for a business. Calculate the net profit after tax.

Accounts payable 3,450
Accounts receivable 7,400
Cost of sales 74,366
Dividends 3,270
Other business expenses 10,134
Income tax expense 20,700
Interest expense 10,000
Other revenue 13,655
Prepaid expenses 11,200
Retained earnings, opening balance 45,780
Sales revenue 280,791
Unearned revenue 2,000

Question

Here are some of the closing balances for a business. Calculate the net profit after tax.

Accounts payable	3,450
Accounts receivable	7,400
Cost of sales	74,366
Dividends 	3,270
Other business expenses	10,134
Income tax expense	20,700
Interest expense	10,000
Other revenue	13,655
Prepaid expenses	11,200
Retained earnings, opening balance	45,780
Sales revenue	280,791
Unearned revenue	2,000

BlackTom AI · Accepted Answer

To determine net profit after tax, we start by identifying the components that contribute to profit.
First, compute gross profit: Sales revenue minus Cost of sales.
- Sales revenue: 280,791
- Cost of sales: 74,366
Gross profit = 280,791 − 74,366 = 206,425.
Next, add any other revenue to the gross profit to capture all income sources not included in sales, then subtract operating-related expenses and interest.
- Other revenue: 13,655
Adjusted subtotal = 206,425 + 13,655 = 220,080.
- Other expenses: 10,134
Subtracting other expenses gives: 220,080 − 10,134 = 209,946.
- Interest expense: 10,000
Subtracting interest expense yields: 209,946 − 10,000 = 199,946.
Now account for income tax expense to arrive at net profit after tax.
- Income tax expense: 20,700
Net profit after tax = 199,946 − 20,700 = 179,246.
Notes and potential distractors:
- Dividends are distributions to owners and do not affect net profit for the period; they reduce retained earnings but are not an expense item in the income statement.
- Prepaid expenses, accounts receivable/payable, and unearned revenue are balance sheet items that may affect cash flow or working capital but do not directly enter the calculation of net profit after tax in the income statement framework.
- Retained earnings opening balance is part of the equity section and reflects prior periods, not the current period’s profit calculation.
Thus, the calculated net profit after tax for the period is 179,246.

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