Question

Plumbing Company provides plumbing services. The company is a sole proprietorship. Selected transactions of Regent Plumbing Company are described as​ follows: ​a) Sharon​ Regent, the​ owner, contributed​ $6,000 cash in exchange for capital. ​b) Paid​ $4,000 cash for equipment to be used for plumbing repairs. ​c) Borrowed​ $10,000 from a local bank and deposited the money in the checking account. ​d) Paid​ $700 rent for the year. ​e) Paid​ $200 cash for plumbing supplies to be used next year. ​f) Completed a plumbing repair project for a local lawyer and received​ $3,000 cash. Calculate the net income. Assume plumbing supplies of​ $200 are left at the end of the accounting period. A. ​$2,300 B. ​$2,800 C. ​$500 D. ​$3,000

Answer 1

Option (A) $2,300

Step-by-step explanation:

Data provided in the question:

Contribution in exchange of capital = $6,000

Amount paid for repairing = $4,000

Amount borrowed and deposited = $10,000

Amount paid for rent = $700

Amount received for completing the repair work i.e the income = $3,000

Now,

Net income

= Revenue earned during the period - Rent expense for the period

= $3,000 - $7,00

= $2,300

hence,

Option (A) $2,300