Question

During the first year of operations, a company sold $109,000 of goods to customers and received $94,500 in cash from customers. The remainder is owed to the company at the end of the year. The company incurred $70,900 in expenses for the year and paid $65,900 in cash for these expenses. The remainder is owed by the company at the end of the year. Based on this information, what is the amount of net income for the year

Answer 1

Answer: $38,100

Explanation:

The following can be gotten from the question:

Goods sold = $109,000

Cash sales = $94,500

Credit sales = $109,000 - $94,500

= $14,500

Expenses incurred = $70,900

Cash expenses paid = $65,900

Outstanding expenses = $70,900 - $65,900 = $5,000

Based on the above analysis, the net income for the year will be:

Cash sales = $94,500

Add: credit sales = $14,500

Less: cash expenses paid= $65,900

Less: outstanding expenses= $5000

Net income = $109,000 - $70,900

Net income = $38,100