Question

Exercise 4-6 Completing the income statement columns and preparing closing entries LO P1, P2 These partially completed Income Statement columns from a 10-column work sheet are for Brown's Bike Rental Company. Account Title Debit Credit Rent earned 120,000 Salaries expense 46,300 Insurance expense 7,400 Office supplies expense 16,000 Bike repair expense 4,200 Depreciation expense—Bikes 20,500 (1) Use the information to determine the amount that should be entered on the net income line of the work sheet.

Answer 1

Answer:

The amount of net income is $25,600

Explanation:

In the income statement, the total revenues and the total expenses are recorded.  

If the total revenues are more than the total expenditure then the company earns net income

And, If the total revenues are less than the total expenditure then the company have a net loss

The computation of the net income is shown below:

= Rent earned - Salaries expense - Insurance expense -  Office supplies expense - Bike repair expense  - Depreciation expense—Bikes

= $120,000 - $46,300 - $7,400 - $16,000 - $4,200 - $20,500

= $25,600