Question 6 3.5 pts XYZ Company began operations in 2019 and ent ered into the fo

Question

Question 6 3.5 pts XYZ Company began operations in 2019 and ent ered into the following transactions during the year: May 1: $280,880 cash Sold common stock to owners for May 10: , 000 on account Purchased inventory costing $40 June 1: cash. The equipnent Purchased equipment for $48,000 was assigned a 18-year life and value a $6,000 residual August 1: Purchased a two-year insurance policy for $24,000 cash. October 3: Sold one-half of the inventory that was purchased on 0; the custoner did ed to pay XYZ Company May 10 to a customer for $49,ee not pay for the goods, but agre within ninety days November 9: Paid stockholders $10,008 cash as a dividend December 17: Collected a $22,000 partial pay ment from the customer who purchased the inventory on October 3. December 31: Recorded adjusting entries rela ted to the equipnent and the prepaid insurance Calculate the anount of net incone that XYZ Company would report in its 2019 income statement after all the above tr ansactions are recorded and all necessary adjusting entries are made and posted

Explanation / Answer

Solution:

XYZ Company Income Statement For year ended 2019 Particulars Amount Sales revenue $49,000.00 Cost of goods sold ($40,000*50%) $20,000.00 Gross Profit $29,000.00 Operating expenses: Depreciation expense [($48,000 - $6,000)/10*7/12) $2,450.00 Insurance expense ($24,000/24*5) $5,000.00 Net Income $21,550.00

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