Question

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions:

1. 1) issued stock for $76,000
2. 2) borrowed $43,000 from its bank
3. 3) provided consulting services for $75,000 cash
4. 4) paid back $33,000 of the bank loan
5. 5) paid rent expense for $18,000
6. 6) purchased equipment for $30,000 cash
7. 7) paid $4,800 dividends to stockholders
8. 8) paid employees' salaries of $39,000

What is Yowell's net income for Year 1?

Multiple Choice

• $18,000

• $57,000

• $13,200

• $34,200

Answer 1

(Ans )	$18000
	Yowell's net income for Year 1 =$18000
	Yowell Company
	Net Income
	Consultancy service Revenue=(A)	$ 75,000.00
	Less: Salary Expense	$ 39,000.00
	Less: Rent Expense	$ 18,000.00
	Total Expense=(B)	$ 57,000.00
	Net Income=(A)-(B)	$ 18,000.00
	Retained Earnings=Net Income-Dividend Paid
	Net Income	$ 18,000.00
	Dividends Paid	$ -4,800.00
	Retained Earnings	$ 13,200.00
	Balance Sheet
	Assets	Amt	Liabilities	Amount
	Cash	$ 69,200.00	Bank Loan	$ 10,000.00
	Equipment	$ 30,000.00	Capital	$ 89,200.00
	Total	$ 99,200.00	Total	$ 99,200.00