n 1 October 2017, Company A started it\'s business. During the month of October
ID: 2592583 • Letter: N
Question
n 1 October 2017, Company A started it's business. During the month of October the following transactions occurred:
1) On Oct 1, the founder invested $1,210 in the firm in exchange for common stock.
2) On Oct 10, Company A purchased $260 worth of inventory. The company paid for $250 of the inventory in cash and purchased the rest of the inventory on account.
3) On Oct 15, Company A sold $120 worth of inventory for $220. The company collected 50% of the sale in cash and the other 50% of the sale was on account.
4) On Oct 20, Company A collected $80 from accounts receivables.
5) On 30 Oct, Company A paid dividends of $20 in cash.
Question: What is the net income for the month of October 2017?
a) $20
b) $100
c) $2,000
d) $220
e) $80
Explanation / Answer
Calculation of net income:
1. Company sold Inventory cost $120 for $220 = $100
Net income for the month Oct 2017 = $100
Note: purchase of inventory, payment creditors, receipts from creditors, dividends paid, investments in funds are not income those are only normal transactions.
Ans) option B) Is correct
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.