Question

Jackson Consulting had the following accounts and balances at December 31:

Using the information in the table, calculate Jackson Consulting's reported net income for the period.

A) $15,300.
B) $10,300.
C) $15,800.
D) $23,200.
E) $16,800.

Answer 1

Without the specific accounts and balances for Jackson Consulting, we cannot calculate its net income. However, for the separate bank case, the bank's net worth would be $220, calculated by subtracting its liabilities from its assets.

Step-by-step explanation:

The question does not provide the specific accounts and balances needed to calculate net income, but generally, to determine net income, you would subtract all expenses and costs from total revenues. This can also be stated as accounting profit. Now, based on the examples given, which mention both accounting profit and the concept of explicit and implicit costs, we can infer that to calculate net income or accounting profit, we need to know the explicit costs and the total revenue figures for Jackson Consulting. Without this essential information provided in the question, it's impossible to accurately compute Jackson Consulting's reported net income.

However, for the hypothetical bank case provided in the latter examples, to calculate the bank's net worth, you would list assets such as loans and government bonds on one side of the T-account and liabilities such as deposits on the other side. The net worth, in this case, would be:
Assets = Reserves + Government Bonds + Loans = $50 + $70 + $500 = $620.
Liabilities = Deposits = $400.
Net Worth = Assets - Liabilities = $620 - $400 = $220.