Question

Hart Company has the following activities in 2012. The company had total cash sales of $2,000. During the year they incurred and paid wages of $500 and salaries of $400. They borrowed $600 from the bank that will be paid back in 2013. This borrowing incurred interest in 2012 of $60. However, this interest will be paid to the bank in 2013. Finally, the company declared and paid cash dividends of $20 during 2012. How much Net Income will the company show on the 2012 Income Statement?

Answer 1

$500

Step-by-step explanation:

2012 Income Statement

Revenue $2,000

Expenses

Wages incurred and paid $500

Salaries $400

Interest on bank loans $600 $1,500

Net Income $500

So, the amount of $500 will be shown as Net Income on the 2012 Income Statement.