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Profit before tax $68000
Tax ($32000)Profit for the year $36000
In addition : 1) paid a dividend of $21000 during the year.
2) A gain on revaluation resulted in surplus of $18,000.What total amount will be added to retained earnings at the end of the financial year?
a) $36000 b) $33000 c) $47000 d) $15000I calculated it as 68000 – 21000 = 47000.
However, the answer on my revision kit says it is D, which is 36000 – 21000 so they’re taking “profit after tax”. However, it is labelled “profit before tax”.
What should I do? ._.
Since it says that the profit before tax is 68,000 and the tax is 32,000, then the profit after tax is 68,000 – 32,000 = 36,000, and it is only ever the profit after tax that goes to retained earnings (less, obviously, the dividends).
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