Question

Metlock, Inc. began the year by issuing $109,000 of common stock for cash. The company recorded revenues of $1,166,000, expenses of $971,000, and paid dividends of $64,000. What was Metlock's net income for the year?

(a) $191,000
(b) $195,000
(c) $195,000
(d) $229,000

Answer 1

Metlock's net income for the year is calculated by subtracting the expenses and dividends from the revenues, which totals $131,000.

Step-by-step explanation:

To calculate Metlock's net income for the year, we need to look at the company's revenues, expenses, and any dividends paid. The formula for finding net income is:

Net Income = Revenues - Expenses - Dividends

Using the provided figures:

• Revenues = $1,166,000
• Expenses = $971,000
• Dividends = $64,000

The calculation of net income would be:

$1,166,000 - $971,000 - $64,000 = $131,000

Therefore, Metlock's net income for the year is $131,000.

Net income (NI), also called net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses. It is a useful number for investors to assess how much revenue exceeds the expenses of an organization. This number appears on a company's income statement and is also an indicator of a company's profitability.