Question

The net income reported on the ABC Co.'s income statement is $150,000. However, adjusting entries were not recorded at the end of the period for depreciation on fixed assets of $10,000, supplies used of $3,000, unearned gift card revenue EARNED during the period of $8,000, and for accrued salaries of $1,500. The correct amount of net income is Select one 0 a. $127,500 b. $163,500 c. $143,500d. $146,500 e. None of the above

Answer 1

Answer:

The correct amount of net income is c. $143,500

Explanation:

After adjusting:

Expense of the ABC Co.'s increase = Depreciation expense + supplies expense + accrued salaries expense = $10,000 + $3,000 + $1,500 = $14,500

Revenue of the ABC Co.'s increase = unearned gift card revenue EARNED = $8,000

Net income = Net income before adjusting + Revenue of the ABC Co.'s increase - Expense of the ABC Co.'s increase = $150,000 + $8,000 - $14,500 = $143,500