Question

ABC Services reported the following transactions for September, 2013. A) The owner opened the business with a capital contribution of $23,500 cash. It was credited to Capital. B) The business purchased office equipment for $11,500. The business paid $2,500 down and put the balance on a note payable. C) The business paid a utility bill for $980 cash. D) The business paid $2,000 cash for September rent. E) The business had sales of $15,000 in September. Of these sales, 60% were cash sales, and the balance was credit sales. F) The business paid $9,700 cash for office furniture. What is the net income for September, 2013

Answer 1

Answer:

The net income for September, 2013 is $12,020

Explanation:

Net Income is calculated as Sales less Expenses.

The First Step is to record the transactions given.

Then determine the Relevant Account Balances (Affecting Income Statement).

Finally, Prepare Income Statement to get the Net Income.

Record.

A.

Cash $23,500 (debit)

Capital $23,500 (credit)

B.

Office Equipment $11,500 (debit)

Cash $2,500 (credit)

Note Payable $9,000 (credit)

C.

Utility Expenses $980  (debit)

Cash $980  (credit)

D.

Rent Expense $2,000 (debit)

Cash $2,000 (credit)

E.

Cash $9,000 (debit)

Accounts Receivable $6,000 (debit)

Sales Revenue $15,000 (credit)

F.

Office Furniture $9,700  (debit)

Cash $9,700  (credit)

Account Balances.

Sales Revenue $15,000 (credit)

Utility Expenses $980  (debit)

Rent Expense $2,000 (debit)

Income Statement for September

Sales Revenue             $15,000

Less Expenses :

Utility Expenses              ($980)

Rent Expense              ($2,000)

Net Income / (loss)      $12,020

Conclusion :

The net income for September, 2013 is $12,020