On December 31, 2014, The Bates Company's revenues total $300,000 and expenses total $160,000 before consideration of the following: Accrued wages total $11,000;
Accrued revenues total $36,000;
Depreciation expense is $17,000;
Rental revenue of $9,000 was earned; the rent from a tenant was initially recorded by Bates as unearned rent revenue;
The income tax rate is 40% of income before income taxes.
What is Bates' net income after consideration of the above information?

Question

Quizplus · Accepted Answer

To calculate net income:  1. Adjust revenues: $300,000 + $36,000 (accrued revenues) + $9,000 (earned rental revenue) = $345,000.  2. Adjust expenses: $160,000 + $11,000 (accrued wages) + $17,000 (depreciation) = $188,000.  3. Income before taxes: $345,000 - $188,000 = $157,000.  4. Income tax: 40% of $157,000 = $62,800.  5. Net income: $157,000 - $62,800 = $94,200.

On December 31, 2014, the Bates Company's Revenues Total $300,000