Question

Ashley's Accessory Shop started the year with total assets of $140,000 and total liabilities of $80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and dividends of $40,000. The net income reported by Ashley's Accessory Shop for the year was

A) $80,000

B) $100,000

C) $130,000

D) $110,000

Answer 1

The net income reported by Ashley's Accessory Shop for the year was $130,000.

Step-by-step explanation:

The net income reported by Ashley's Accessory Shop for the year can be calculated as follows:

• Start with total assets at the beginning of the year: $140,000
• Subtract total liabilities at the beginning of the year: $80,000
• Add revenues during the year: $220,000
• Subtract expenses during the year: $110,000
• Subtract dividends paid during the year: $40,000

Net income = $140,000 - $80,000 + $220,000 - $110,000 - $40,000 = $130,000.

Therefore, the net income reported by Ashley's Accessory Shop for the year was $130,000.