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Sunny_sXe [5.5K]
2 years ago
10

2. A company’s financial records at the end of the year include the following amounts: Cash $ 70,000 Accounts receivable 28,000

Supplies 4,000 Accounts payable 10,000 Notes payable 5,000 Retained earnings, beginning of year 17,000 Common stock 40,000 Service revenue 62,000 Wages expense 8,000 Advertising expense 6,000 Rent expense 10,000 What is the amount of net income on the income statement for the year? a. $47,000. b. $88,000. c. $38,000. d. $30,000.
Business
1 answer:
irinina [24]2 years ago
6 0

Answer:

c. $38,000

Explanation:

In the income statement, the total revenues and the total expenses are recorded.  

If the total revenues are more than the total expenditure then the company earns net income

And, If the total revenues are less than the total expenditure then the company have a net loss

This net income or net loss would reflect in the statement of the retained earning account.  

The computation of the net income is shown below:

=  Service revenue - Wages expense - Advertising expense - Rent expense

= $62,000 - $8,000 - $6,000 - $10,000

= $38,000

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Explanation:

As we know the sale is credit in nature and inventory sold on credit increases the trade receivable which is debit in nature.

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So for the sale of 60,000 units the total cost of equivalent will be:

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And the entry would be:

Dr Cost of goods sold $360,000

Cr Finished Goods account  $360,000

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