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During the year, the company earned revenue of $5,400, all of which was received

ID: 2417829 • Letter: D

Question

During the year, the company earned revenue of $5,400, all of which was received in cash, and incurred expenses of $3,200, all of which were unpaid as of the end of the year. In addition, the company paid dividends of $1,400 to owners. Assume no other activities occurred during the year.

What was the amount of net income for the year?

$3,200

$2,200

$1,400

$5,400

A company started the year with the following: Assets $104,000; Liabilities $34,000; Common Stock $64,000; Retained Earnings $6,000.

During the year, the company earned revenue of $5,400, all of which was received in cash, and incurred expenses of $3,200, all of which were unpaid as of the end of the year. In addition, the company paid dividends of $1,400 to owners. Assume no other activities occurred during the year.

Explanation / Answer

Net income=

Revenues ($54,00) Expenses ($3,200)

= $2,200