Question

Use the adjusted trial balance for Stockton Company below to answer the questions that follow. Stockton Company Adjusted Trial Balance December 31 Cash 7,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100 Accounts Payable 1,900 Notes Payable 4,300 Common Stock 1,000 Retained Earnings 12,940 Dividends 790 Fees Earned 9,250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 185 ​ Totals 30,490 30,490 ​ Determine the net income (loss) for the period. a. net income $9,250 b. net income $3,580 c. net loss $5,670 d. net loss $790

Answer 1

Answer:

b. net income $3,580

Explanation:

The computation of the net income is shown below:

= Total revenues - total expenses

where,

Total revenues is fees earned i.e $9,250

And, the total expenses is

= Wages expense + rent expense + utilities expense + depreciation expense + miscellaneous expense

= $2,500 + $1,960 + $775 + $250 + $185

= $5,670

So, the net income is

= $9,250 - $5,670

= $3,580

We simply deduct the all expenses from the revenues earned so that the net income could come