Question

A company's December 31 work sheet for the current period appears below. Based on the information provided, what is net income for the current period?

	Unadjusted Trial Balance				Adjustments
	Debit		Credit		Debit		Credit
Cash	2,165
Accounts receivable	1,190				1,065
Prepaid insurance	1,790						840
Supplies	520						305
Equipment	8,510
Accumulated depreciation—equipment			910				380
Accounts payable			1,330
Owner, Capital			10,250
Owner, Withdrawals	1,240
Fees earned			7,440				1,065
Rent expense	1,490
Salaries expense	2,490
Utilities expense	535
Insurance expense					840
Supplies expense					305
Depreciation expense—equipment					380
Totals	19,930		19,930		2,590		2,590

Multiple Choice

• $2,925.

• $1,400.

• $1,780.

• $3,990.

• $2,465.

Answer 1

here Answer is $2465

which is calculated on following basis

Income Statement is prepared on the basis of adjusted trial balance as is prepared at the end

Income Statement
For the year ended On December 31,….
Fee Earned			$      8,505
Less: Operating expenses:
Salaries Expense	$                (2,490)
Utilities Expenses	$                   (535)
Depreciation Expenses	$                   (380)
Rent Expense	$                (1,490)
Insurance	$                   (840)
Supplies	$                   (305)
Total operating expenses		(6,040)	$    (6,040)
Net income before tax			$      2,465

Adjusted Trial Balance is as follow

Unadjusted Trial Balance	Unadjusted Balances		Adjustments		Adjusted Trial balance
	Debit	Credit	Debit	Credit	Debit	Credit
Cash	2,165				2,165
Accounts receivable	1,190		1,065		2,255
Prepaid insurance	1,790			840	1,790	840
Supplies	520			305	520	305
Equipment	8,510				8,510
Accumulated depreciation—equipment		910		380		1290
Accounts payable		1,330				1330
Owner, Capital		10,250				10250
Owner, Withdrawals	1,240				1,240
Fees earned		7,440		1,065		8505
Rent expense	1,490				1,490
Salaries expense	2,490				2,490
Utilities expense	535				535
Insurance expense			840		840
Supplies expense			305		305
Depreciation expense—equipment			380		380
Totals	19,930	19,930	2,590	2,590	22,520	22,520