Closing entries included debits to revenues for a total of $5,000,credits to expenses for a total of $3,000,and a credit to dividends for $1,000.The net income for the month was:
A)$1,000.
B)$2,000.
C)$3,000.
D)$4,000.

Question

Quizplus · Accepted Answer

Since there is a credit to dividends account, it means that the company distributed $1,000 out of its net income to shareholders as dividends.

To calculate the net income, we add the total of debits to revenue ($5,000) and subtract the total of credits to expenses ($3,000), which gives us a net income of $2,000.

Therefore, the correct answer is B) $2,000.

Closing Entries Included Debits to Revenues for a Total of $5,000,credits