Question

Following is a list of account balances of Lincoln Lawn Services as of December 31, after the first year of operations.

Accounts Receivable	$6,000
Accounts Payable	$5,000
Salaries Expense	$7,000
Repairs Expense	$900
Truck	$11,000
Equipment	$12,000
Notes Payable	$26,100
Cash	$20,000
Supplies Expense	$200
Service Revenue	$32,000
Gasoline Expense	$7,200
Salaries Payable	$1,200

Calculate the net income.

A. $49,000

B. $31,100

C. $16,700

D. $17,900

Answer 1

Answer: C. $16,700

Explanation

Calculation of Net income
	$	$
Revenues:
Service revenue	32,000.00
Total Revenues		32,000.00
Expenses:
Salaries expense	7,000.00
Repairs Expense	900.00
Supplies Expense	200.00
Gasoline Expense	7,200.00
Total expenses		15,300.00
Net income		16,700.00