Pepper Company reported revenues of $12,000, supplies expense of $3,000, and net income of $2,000 for...

Pepper Company reported revenues of $12,000, supplies expense of $3,000, and net income of $2,000 for the most recent period. If the company’s only other expense was Rent Expense, what was its balance at the end of the period?

Multiple Choice

$7,000
$9,000
$14,000
$15,000

Solutions

Expert Solution

The correct answer is $7,000.

Balance of rent expense at the end of the period was $7,000.

Explanation:

It is given,
Revenues = $12,000
Supplies expense = $3,000
Net income = $2,000
Company's only other expense was Rent expense.

The equation for net income is,
Net income = Revenues - Expenses
$2,000 = $12,000 - (Supplies expense + Rent expense)
$2,000 = $12,000 - ($3,000 + Rent expense)

$3,000 + Rent expense = $12,000 - $2,000

Rent expense = $12,000 - $2,000 - $3,000 = $7,000

ekkarill92 answered 2 years ago

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