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 $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders 8) paid employees' salaries of $21,000 What is Yowell's net income for Year 1?

Answer 1

Answer:  $9,000

Explanation:

Given that,

1) issued stock = $40,000

2) borrowed = $25,000 from its bank

3) provided consulting services = $39,000 cash

4) paid back = $15,000 of the bank loan

5) paid rent expense = $9,000

6) purchased equipment = $12,000 cash

7) paid = $3,000 dividends to stockholders

8) paid employees' salaries = $21,000

Yowell's net income for Year 1:

= Cash received from consulting services - Rent expense paid - Employees salaries paid

= $39,000 - $9,000 - $21,000

= $9,000