Question

During August, 2018, Baxter’s Supply Store generated revenues of $60,000. The company’s expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter’s net income for August, 2018 is Group of answer choices $21,000. $24,000. $23,000. $20,000.

Answer 1

$23,000

Step-by-step explanation:

The Net income of the company can be found from the following formula:

Net Income = Revenue - Cost of goods sold - Operating Expense + Rental Income + Gain on Sale

Here

Revenue generated is $60,000

Cost of goods sold is $36,000

Operating expenses are $4,000

Rental Income is $1,000

Gain on sale of the delivery Truck is $2,000

By putting values in the equation, we have:

Net Income = $60,000 - $36,000 - $4,000 + $1,000 + 2,000

Net Income = $23,000