Question

The trial balance after adjustment had the following balances on December 31, 2019. Use this information to answer the following questions. (in $ thousands)

Cash $45
Accumulated Depreciation $20
Accounts Payable 4
Dividend 15
Prepaid Expenses 2
Unearned Revenue 18
Building 600
Inventory 22
Common Stock 633
Notes Payable (due March 2022) 33
Land 60
Accounts Receivable 17
Service Revenue 104
Depreciation Expense 15
Wage Expense 50
Rent Expense 14
Misc. Expense 3
Patent 11
Wages Payable 12
Retained Earnings (Jan 1, 2019) 30
Determine Net Income for the year 2019.

Answer 1

Net income is $22,000.

Step-by-step explanation:

Net income for a particular accounting period refers revenue minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes.

Since there are no cost of goods sold, interest, and taxes in the information in the question, the Net Income for the year 2019 can be determined based on the information provided in the question by preparing an income statement as follows:

Income Statement

For the Year Ended December 31, 2019

Details Amount ($'000)

Revenue:

Service Revenue 104

Expenses:

Depreciation Expense (15)

Wage Expense (50)

Rent Expense (14)

Misc. Expense (3)

Net income 22

Therefore, net income is $22,000.

That is, since the figures are in $ thousands, we have:

Net income = Service Revenue - Depreciation Expense - Wage Expense - Rent Expense - Misc. Expense = $104,000 - $15,000 - $50,000 - $14,000 - $3,000 = $22,000