Question

1. Sell product for $25,000 with historical cost of $20,000 2. Sell product for $20,000 with historical cost of $16,000 3. Sell product for $40,000 with historical cost of $32,000 What is the final amount in Retained Earnings

Answer 1

The final amount in Retained Earnings after selling the three different products with different prices and historical costs is $17,000.

What is the difference between the selling price and historical cost?

The difference between the selling price and its historical cost is profit.

Profit is the financial benefit realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes.

Data and Calculations:

Product     Selling Price    Historical Cost    Profit

A                   $25,000          $20,000         $5,000 ($25,000 - $20,000)

B                   $20,000           $16,000         $4,000 ($20,000 - $16,000)

C                  $40,000           $32,000         $8,000 ($40,000 - $32,000)

Total            $85,000           $68,000        $17,000

Thus, the final amount in Retained Earnings after selling the three different products with different prices and historical costs is $17,000.

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