The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: What is the amount of net income that will be reported on the Year 1 income statement?
A)$650
B)$2,650
C)$1,450
D)$4,100

Question

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1:  What is the amount of net income that will be reported on the Year 1 income statement?
A)$650 
B)$2,650 
C)$1,450 
D)$4,100

Quizplus · Accepted Answer

To calculate the net income, we need to find the difference between the total revenues and total expenses. 
Total Revenues = Sales + Service Revenue = $16,000 + $1,500 = $17,500 
Total Expenses = Rent + Salaries + Utilities + Supplies = $1,200 + $6,750 + $1,000 + $2,100 = $11,050 
Net Income = Total Revenues - Total Expenses = $17,500 - $11,050 = $6,450 
Therefore, the correct option is C, which is $1,450.

The Following Pre-Closing Accounts and Balances Were Drawn from the Records