Question

During January 2018, the first month of operations, a consulting firm had following transactions:

1. Issued common stock to owners in exchange for $48,000 cash.
2. Purchased $12,000 of equipment, paying $2,400 cash and signing a promissory note for $9,600.
3. Received $21,600 in cash for consulting services performed in January.
4. Purchased $3,600 of supplies on account; all of the supplies were used in January
5. Provided consulting services on account in the amount of $38,400.
6. Paid $1,800 on account.
7. Paid $7,200 to employees for work performed during January.
8. Received a bill for utilities for January of $8,150; the bill remains unpaid.
What is the total expenses that will be reported on the income statement for the month ended January 31?
a. $18,950.
b. $10,800.
c. $9,000.
d. $19,550.

Answer 1

d. $19,550.

Step-by-step explanation:

supplies expense = $3,600

utilities expense = $8,150

wages expense = $7,200

total expenses = $18,950

money paid for accounts payable is not considered an expense since the debt results from purchasing equipment. Depreciation of the equipment is an expense but wasn't specified in the question.