Q 1.153: The Ryan Express, provider of tax services, starts operations on 1/1/17

Question

Q 1.153: The Ryan Express, provider of tax services, starts operations on 1/1/17. Now that the company has been in business for more than a year, the controller is assembling financial statements for the year ended 12/31/17. During 2017, the following transactions took place: Per 1. On January 1, 2017, shareholders paid $1,000,000 in cash for common stock. 2. Ryan Express earned revenue of $500,000 which increased Accounts Receivable (not cash). 3. Ryan Express paid $125,000 in salaries expense. 4. Ryan Express paid $75,000 in rent expense. 5. Ryan Express bought $25,000 of supplies but did not pay cash, so this increased Accounts Payable. 6. Ryan Express paid $10,000 in travel expense. 7. Clients paid Ryan Express cash of $400,000 for transaction #2, which reduced accounts receivable 8. Ryan Express paid shareholders a $190,000 cash dividend. Abc Ryan Express Net Income for 2017 is A $190,000. B $265,000. C $165,000. D) $290,000 Stue SUBMIT enfidence

Explanation / Answer

Solution:

Hence option D is correct.

Computation of Net Income - Ryan Express Particulars Amount Revenue $500,000.00 Expenses: Salaries expense $125,000.00 Rent Expense $75,000.00 Travel expense $10,000.00 Net Income $290,000.00

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