Nelson Company experienced the following transactions during Year 1, its first year in operation.Acquired $12,000 cash by issuing common stockProvided $4,600 of services on accountPaid $3,200 cash for operating expensesCollected $3,800 of cash from customers in partial settlement of its accounts receivablePaid a $200 cash dividend to stockholdersWhat is the amount of net income that will be reported on the Year 1 income statement?
A)$1,400
B)$800
C)$1,000
D)$1,200

Question

Quizplus · Accepted Answer

Net income is calculated as revenues minus expenses. In this case, the company provided $4,600 of services on account and collected $3,800 of cash from customers, resulting in revenues of $4,600. The company also paid $3,200 cash for operating expenses and paid a $200 cash dividend to stockholders, resulting in total expenses of $3,400. Therefore, the net income for the year is $4,600 - $3,400 = $1,200.

Nelson Company Experienced the Following Transactions During Year 1, Its