Question

A company's financial records at the end of the year included the following amounts: Cash $70,000 Accounts Receivable 28,000 Supplies 4,000 Accounts Payable 10,000 Notes Payable 5,000 Retained Earnings, beginning of year 17,000 Common Stock 40,000 Service Revenue 53,000 Wages Expense 8,000 Advertising Expense 5,000 Rent Expense 10,000 What is the amount of net income on the income statement for the year

Answer 1

The income statement for the year will show a net income of 87,000 during the financial year.

What is net income?

In business, net income refers to the amount of money left over after all expenditures have been paid, such as salaries and wages, the cost of items or raw materials, and taxes.

Net Income = Gross Profit — Operating Expenses — Other Business Expenses — Taxes — Interest on Debt + Other Income

Given:

Cash = $70,000

Accounts Receivable =28,000

Supplies= 4,000

Accounts Payable = 10,000

Notes Payable = 5,000

Retained Earnings, beginning of year = 17,000

Common Stock=  40,000

Service Revenue=  53,000

Wages Expense=  8,000

Advertising Expense  =  5,000

Rent Expense  = 10,000

so, the Net income during the given period will be :

NI = total revenue-total expenses

=1,02,000-15,000

=87,000

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