Question

A company had credit sales of $ 35 comma 000 and cash sales of $ 25 comma 000 during the month of May. Also during​ May, the company paid wages of $ 24 comma 000 and utilities of $ 9 comma 000. It also received payments from customers on account totaling $ 4 comma 600. What was the​ company's net income for the​ month?

Answer 1

Answer:

The​ company's net income for the​ month was $27 comma 000

Explanation:

Net income = Total Sales - total expense

During the month of May,

Total Sales = credit sales + cash sales = $35,000 + $25,000 = $60,000

The company paid wages of $ 24 comma 000, the wages expense was $ 24 comma 000.

The company paid utilities of $ 9 comma 000, the utilities expense was $ 9 comma 000

Total expense = wages expense + utilities expense = $24,000 + $9,000 = $33,000

The payment that the company received from its customer was not the sales or expense. It made increase cash and reduce account receivable.

Net income = $60,000 - $33,000 = $27,000