Question

A company's december 31 work sheet for the current period appears below. based on the information provided, what is net income for the current period? unadjusted trial balance adjustments debit credit debit credit cash 2,145 accounts receivable 1,170 1,045 prepaid insurance 1,770 820 supplies 500 285 equipment 8,490 accumulated depreciation—equipment 890 360 accounts payable 1,310 owner, capital 10,130 owner, withdrawals 1,220 fees earned 7,420 1,045 rent expense 1,470 salaries expense 2,470 utilities expense 515 insurance expense 820 supplies expense 285 depreciation expense—equipment 360 totals 19,750 19,750 2,510 2,510

Answer 1

Complete Question:

A company's December 31 work sheet for the current period appears below (see attached image below). Based on the information provided, what is net income for the current period?

a. $3,265

b. $3,145

c. $4,160

d. $2,460

e. $2,250

Answer:

option b

Explanation:

Total Fees earned = Fees earned (Unadjusted trial balance) + Fees earned (Adjustment)

                               = $7,270 + $890

                               = $8,165

Note

Fees earned in the unadjusted trial balance is earned revenue. Fees earned in the adjustment is unearned revenue. Fees earned is a revenue and increases the stockholders’ equity. So, it appears in the credit side. Total fees earned is determined as the sum of fees earned in the unadjusted trial balance and adjusting entry.

Amount of expenses                                              Amount ($)

Rent expense                                                           1,320

Salaries expense                                                     2,320

Utilities expense                                                      365

Insurance expense                                                  670

Supplies expense                                                    135

Depreciation expense - Equipment                     210      

Total Expenses                                                       5,020

Also, note that expenses are borne by a company to produce and sell the goods and services to the customers.The amount of expense are determined as the sum of all the expenses given in the unadjusted trial balance and the adjustments.

hence,

Net Income = Income - Expenses

                   = $8,165 - $5,020

                   = $3,145

Now revenue is the total income earned by an organization by selling goods or rendering services.The costs borne by a company to produce and sell the goods and services to the customers are known as expenses. Net income for the company is determined as the difference between total income and total expenses.