Question

Camrim Inc., experienced the following events in 2018, its first year of operation: Performed counseling services for $21,700 on account. On May 1, 2018, paid $5,600 cash to rent office space for the next 12 months.. Adjusted the accounts to reflect the amount of rent used during the year. Based on these three events, net income is

Answer 1

Answer:

Net  income is $ 17,966.67  

Explanation:

The net income for the year is the revenue for counselling services of $21,700 minus the eight-month rent expense which is from May 2018 to December 2018, even though rent was paid for 12 months, only eight months relate to the current year.

Net income=$21,700-($5,600*8/12)=$21,700-$3,733.33  =$ 17,966.67  

The net income after deducting rent expense related to the current year from the counselling revenue is $ 17,966.67