Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1)issued stock for $40,0002)borrowed $25,000 from its bank3)provided consulting services for $39,0004)paid back $15,000 of the bank loan5)paid rent expense for $9,0006)purchased equipment costing $12,0007)paid $3,000 dividends to stockholders8)paid employees' salaries for work completed during the year, $21,000
What is Yowell's net income?
A)$9,000
B)$30,000
C)$18,000
D)$6,000

Question

Quizplus · Accepted Answer

Net income is calculated as revenues minus expenses. In this case, Yowell's revenues are $39,000 and its expenses are $9,000 + $12,000 + $3,000 + $21,000 = $45,000. Therefore, Yowell's net income is $39,000 - $45,000 = -$6,000.

Yowell Company Began Operations on January 1, Year 1