Question

XYZ Company began operations in May, 2018 by selling common stock to
owners in exchange for $90,000 cash. During 2018, ABC Company entered
into the following transactions:

1.  On May 23, ABC Company purchased inventory for $50,000 cash.

2.  On June 1, ABC Company purchased a three-year insurance policy
    for $23,400 cash.

3.  On July 1, ABC Company received $49,500 cash from a customer
    for services to be performed over the next 18 months.

4.  On August 1, ABC Company purchased equipment for $60,000 cash.
    The equipment was assigned a 10-year life and a $2,400 residual
    value.

5.  On August 18, ABC Company sold one-half of the inventory that
    was purchased on May 23 to a customer for $44,000 cash.

Calculate the amount of net income that ABC Company would report in its
2018 income statement after all the above transactions are recorded and
all necessary adjusting entries are made and posted. 

Answer 1