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Waldorf Co.had the following transactions during the month of October 2018:
(1)Cash received from bank loans was $60,000.
(2)Dividends of $18,500 were paid to stockholders in cash.
(3)Revenues earned and received in cash amounted to $100,500.
(4)Expenses incurred and paid were $78,000.
-What amount of net income will be reported on an income statement for the month of October?
A)$ 18,500.
B)$ 22,500.
C)$ 78,000.
D)$100,500.

Question

Quizplus · Accepted Answer

Net income is calculated as revenue earned minus expenses incurred. In this case, revenues earned and received in cash were $100,500, and expenses incurred and paid were $78,000. Therefore, net income for the month of October is $22,500 (100,500 - 78,000). Option A is incorrect because it represents the amount of dividends paid to stockholders, which is not relevant to calculating net income. Option C represents the expenses incurred and paid, which is also not the correct answer for net income. Option D represents total revenue earned in the month, which again is not the correct answer for net income.

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