A company had calculated net income to be $78,100 based on the unadjusted trial

Question

A company had calculated net income to be $78,100 based on the unadjusted trial balance. The following adjusting entries were then made for:

Salaries and wages owed but not yet paid of $845

Interest earned but not received from investments of $805

Prepaid insurance premiums amounting to $605 have expired

Unearned revenue in the amount of $805 has now been earned.

Required: Determine the amount of net income (loss) that will be reported after the adjustments are recorded.

A. $77,860

B.$80,315

C. $78,260

D. $75,040

Explanation / Answer

Answer is C

Net income /(Loss) Net income before adjustment 78100 Less: Salaries and wages owed but not yet paid -845 Add: Interest Earned but not received 805 Less: Prepaid insurance premium expired -605 Add: Unearned revenue has been earned 805 78,260

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