Question

The Graves Corporation started operations this month and had the following transactions: Owners invested $8,000 to start company Purchased a 4-month insurance policy for $600 Purchased $400 of supplies on account 1 1 12 20 Customers paid for $500 of services in advance. 25 Completed $800 of services for another customer, sent bill. 30Paid $200 to suppliers for supplies previously purchased on account At the end of the month, $80 of supplies were on still hand. D Question 1 As a result of the information above, what is the company's net income for the month? G Search or type URL

Answer 1

The Graves Corporation's net income for the month is calculated by subtracting the total expenses from the total revenue. The total revenue is $1,300, and the total expenses are $470 ($320 for supplies plus $150 for insurance), resulting in a net income of $830.

Step-by-step explanation:

To calculate the net income for Graves Corporation, we should account for the revenue earned and expenses incurred during the month. We start by identifying revenue from services, which is the sum of services paid in advance by customers and services billed to a customer, totaling $500 + $800 = $1,300. Next, we calculate the expenses for the month, which include the supplies expense adjusted for the supplies still on hand at the end of the month ($400 - $80 = $320) and the portion of the prepaid insurance that counts as an expense for the month ($600/4 months = $150). The net income is thus calculated as total revenue minus total expenses, or $1,300 - ($320 + $150) = $830.

Answer 2

The company's net income for the month is $500.

Step-by-step explanation:

The company's net income for the month can be calculated by adding all the revenues and subtracting all the expenses.

• Owners invested $8,000 to start the company, so this is not an expense.
• The insurance policy and supplies purchased on account are expenses.
• The customers' advance payment is revenue.
• The services completed and billed are revenue.
• The payment to suppliers is an expense.
• The supplies on hand are not counted as an expense.

To calculate the net income, subtract the total expenses from the total revenues.

Net income = Revenue - Expenses

Therefore, the company's net income for the month is the sum of the revenues ($500 + $800) minus the sum of the expenses ($600 + $400 + $200) which equals $1,700 - $1,200, resulting in a net income of $500.