Question

Baxter Company's worksheet has the following balances: Income Statement Columns, debit of $37,000 and credit of $49,000 and Balance Sheet columns, debit of $ 85,000 and credit of $73,000. Net income or net loss for the period is:a. Not determinable from the informationb. $49,000 net incomec. $12,000 net incomed. $12,000 net loss

Answer 1

c. $12,000 net income

Step-by-step 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

This net income or net loss would reflect in the statement of the retained earning account.

So, the net income or loss would be

= Credit balance of income statement - Debit balance of income statement

= $49,000 - $37,000

= $12,000

This positive amount $12,000 would reflect the net income