Question

Foxes Service Shop started the year with total assets of $320.000 and total liabilities of $240,000. During the year, the business recorded $630,000 in revenues, $450,000 in expenses, and owner drawings of $60,000. The net income reported by Foxes Service Shop for the year was

a. $140,000.
b. $180,000.
c. $200,000.
d. $270,000.

Answer 1

Foxes Service Shop's net income for the year is calculated by subtracting expenses and owner drawings from revenues, resulting in a net income of $180,000. The net income for Foxes Service Shop for the year is $180,000 (option b).

Step-by-step explanation:

The student asked what the net income reported by Foxes Service Shop for the year was, given the values for total assets, total liabilities, revenues, expenses, and owner drawings at the start of the year. To calculate net income, you need to subtract the total expenses and owner drawings from the total revenues. Foxes Service Shop recorded $630,000 in revenues, $450,000 in expenses, and owner drawings of $60,000. The calculation is as follows:

1. Net Income = Revenues - Expenses - Owner Drawings
2. Net Income = $630,000 - $450,000 - $60,000
3. Net Income = $180,000

Thereby the net income for Foxes Service Shop for the year is $180,000 (option b).