Question

Jeff Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred: Jackson invested $25,000 cash in the business in exchange for common stock. Jackson contributed $100,000 of equipment to the business. The company paid $2,000 cash to rent office space for the month of March. The company received $16,000 cash for repair services provided during March. The company paid $6,200 for salaries for the month of March. The company provided $3,000 of services to customers on account. The company paid cash of $500 for utilities for the month of March. The company received $3,100 cash in advance from a customer for repair services to be provided in April. The company paid $5,000 in cash dividends.
Based on this information, net income for March would be:
a. $8,400.
b. $5,300.
c. $13,400.
d. $10,300.
e. $13,500.

Answer 1

Answer:

Correct answer is D, $10,300

Explanation:

In order to get the net income, we must compute the Total revenue first, then deduct the total expenses. The total revenue for the month of March is $19,000 ($16,000 + $3,000). Then the total expenses is $8,700 ($2,000 rent + $6,200 salaries + $500 utilities expense). Therefore, $19,000 less $8,700 is $10,300.