Question

Presented below is selected data related to Mike Corporation at December 31, 2020. Mike reports financial information monthly.

Service Revenue $36,000 Utilities Expense $4,000
Cash 8,000 Accounts Receivable 9,000
Equipment 10,000 Salaries and Wages Expense 7,000
Rent Expense 11,000 Notes Payable 16,500
Accounts payable 2,000 Dividends 5,000

Required:
a. Determine the total assets of the firm.
b. Determine the net income of the firm.

Answer 1

a. Total assets of the firm:

Cash $8,000

Equipments $10,000

Accounts Receivable $9,000

Total Assets $27,000

b. Net income of the firm

Service Revenue $36,000

Less: Rent Expenses $11,000

Less: Utilities Expense $4,000

Less: Salaries and Wages Expense $7,000

Net Income $14,000