Question

Sparty Corporation has provided the following information for its most recent year of operation:

Revenues earned were $97,000, of which $9,000 were uncollected at the end of the year. Operating expenses incurred/used were $39,000, of which $7,000 were unpaid at the end of the year.
Dividends declared were $11,000, of which $3,000 were unpaid at the end of the year.
Income tax expense is $17,400.
What is the amount of net income reported on Sparty's income statement?
A. $32,900.
B. $39,300.
C. $33,600.
D. $58,000.
E. $40,600

Answer 1

E. $40,600

Step-by-step explanation:

Calculation for the amount of net income reported on Sparty's income statement

Revenue $97,000

Less: Operating Expenses $39,000

Profit Before Tax $58,000

(97,000-39,000)

Less Taxes $17,400

Net Income $40,600

($58,000-$17,400)

Therefore the amount of net income reported on Sparty's income statement will be $40,600