Question

Before making month-end adjustments, Net Income of Shiau Company was $37,000 for March. Adjusting entries are necessary for the following items: Supplies used up during March: $2,300. Interest accrued on Notes Receivable: $600. Fees earned in March that had been collected in advance: $2,400. Wages earned by employees not yet paid on March 31: $1,700 After recording these adjustments, net income for March is:

Answer 1

Net income for March after recording these adjustments is $36,000.

Step-by-step explanation:

Net income for March after recording these adjustments can be obtained by adding month-end revenue items to net income before month-end adjustments and subtracting month-end expense items from net income before month-end adjustments.

This is to ensure that the matching principle of accounting which states that revenue must be added when earned and expenses must be substracted when incured.

For this question, net income for March after recording these adjustments can be obtained is obtained as follows:

Particulars Amount ($)

Net income before month-end adjustments 37,000

Month-end adjustments

Supplies used up during March (2,300)

Interest accrued on Notes Receivable 600

Fees earned in March collected in advance 2,400

Wages earned by employees (1,700)

Net income before month-end adjustments 36,000

Therefore, net income for March after recording these adjustments is $36,000.