Nelson Company experienced the following transactions during Year 1, its first year in operation.Acquired $6,800 cash by issuing common stock.Provided $3,100 of services on account.Paid $1,800 cash for operating expenses.Collected $2,300 of cash from customers in partial settlement of its accounts receivable.Paid a $140 cash dividend to stockholders.What is the amount of net income that will be reported on the Year 1 income statement?
A)$940
B)$1,300
C)$1,080
D)$800

Question

Quizplus · Accepted Answer

Net income is calculated as total revenues minus total expenses. The revenue from services provided is $3,100. The operating expenses are $1,800. Therefore, net income is $3,100 - $1,800 = $1,300. The dividend paid does not affect net income as it is a distribution of earnings, not an expense.

Nelson Company Experienced the Following Transactions During Year 1, Its