Question

On December 31, 2019, The Bates Company's revenue is $360,000 and expenses total $260,000 before consideration of the following:

Accrued wages total $14,000;

Accrued revenues total $42,000;

Depreciation expense is $20,000;

Rental revenue of $4,000 was earned; the rent from a tenant was initially recorded by Bates as unearned rent revenue;

The income tax rate is 35% of income before income taxes.

What is Bates' net income after consideration of the above information?

Multiple Choice

• $72,800.

• $70,200.

• $100,000.

• $112,000.

Answer 1

Solution:
	CALCULATION OF NET INCOME
	Revenue	$         360,000
	Add: Accrued Revenue	$            42,000
	Add: Rental Revenue	$              4,000
	Total Revenue		$        406,000
	Less: Expenses
	Expenses before adjustement	$         260,000
	Add: Accrued Wages	$            14,000
	Add: Depreciation Expenses	$            20,000
	Total Expenses		$        294,000
	Net Income		$        112,000
	Answer = Option 4 = $ 112,000