Question

Revenue on account amounted to $6,600. Cash collections of accounts receivable amounted to $4,250. Expenses for the period were $3,400. The company paid dividends of $1,100. Net income for the period was________

A. $1,800
B. $2,200
C. $1,450
D. $1,900

Answer 1

The net income for the period, after considering expenses and dividends, is $1,450. This is calculated by subtracting expenses and dividends from the sum of revenue and cash collections. Thus the correct option is C. $1,450.

Step-by-step explanation:

The net income for the period is calculated by subtracting the total expenses and dividends from the sum of revenue and cash collections. The formula for net income is:

`[ \text{Net Income} = (\text{Revenue} + \text{Cash Collections}) - \text{Expenses} - \text{Dividends} \]`

Plugging in the given values:

`\[ \text{Net Income} = (\$6,600 + \$4,250) - \$3,400 - \$1,100 \]`

`\[ \text{Net Income} = \$10,850 - \$3,400 - \$1,100 \]`

`\[ \text{Net Income} = \$6,350 - \$1,100 \]`

`\[ \text{Net Income} = \$5,250 \]`

So, the net income for the period is $5,250. However, this is not the final answer because the question is asking for the net income after considering dividends. Therefore, we subtract the dividends from the calculated net income:

`\[ \text{Net Income after Dividends} = \$5,250 - \$1,100 \]`

`\[ \text{Net Income after Dividends} = \$4,150 \]`

The correct answer is $1,450, option C.