Question

Regent Plumbing Corporation provides plumbing services. Selected transactions of Regent Plumbing Corporation are described as​ follows:
a) Completed a plumbing repair project for a local lawyer and received​ $3,500 cash.​b) Paid​ $5,000 cash for equipment to be used for plumbing repairs.​c) Borrowed​ $11,000 from a local bank and deposited the money in the checking account.​d) Paid​ $900 rent for the year.​e) Paid​ $200 cash for plumbing supplies to be used next year.​f) Completed a plumbing repair project for a local lawyer and received​ $3,000 cash.Calculate the net income. Assume plumbing supplies of​ $200 are left at the end of the accounting period. A. ​$700B. ​$2,100C. ​$2,800D. ​$3,000

Answer 1

Answer:

net income 5,600

Explanation:

a.- service revenue   3,500

b.- it do not affect the net income. Is trading one asset (cash) for another (equipment)

c.- it do not affect the income. It increase a liability (note payable) and an asset (cash)

d.- rent expense          (900)

e.- it do not affect the net income. Is trading one asset (cash) for another (supplies)

f .- service revenue   3,000

net income = revenue - expenses

service revenue 3,500 + 3,000 =  6,500

rent expense                                    (900)

net income                                      5,600