Question

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $52,000 2) borrowed $31,000 from its bank 3) provided consulting services for $50,000 cash 4) paid back $21,000 of the bank loan 5) paid rent expense for $12,000 6) purchased equipment for $18,000 cash 7) paid $3,600 dividends to stockholders 8) paid employees' salaries of $27,000 What is Yowell's net income for Year 1?

Answer 1

Answer:

$11,000

Explanation:

Data provided as per the requirement of net income for year 1 is here below:-

Provided consulting services = $50,000

Paid rent expense = $12,000

Paid employees salaries = $27,000

The computation of net income for Year 1 is shown below:-

Net income for Year 1 = Service revenue - Rent expense - Salary expenses

= $50,000 - $12,000 - $27,000

= $11,000

Therefore for computing the Net income for Year 1 we simply applied the above formula.