A company had credit sales of $30,000 and cash sales of $20,000 during the month of May.Also during May,the company paid wages of $21,000 and utilities of $8,000.It also received payments from customers on account totaling $4,000.What was the company's net income for the month?

Question

Quizplus · Accepted Answer

To calculate net income, we need to subtract all expenses from total sales.

Total sales = Credit sales + Cash sales = $30,000 + $20,000 = $50,000 
Total expenses = Wages + Utilities = $21,000 + $8,000 = $29,000 
Total payments received from customers = $4,000

Net income = Total sales - Total expenses + Total payments received from customers 
Net income = $50,000 - $29,000 + $4,000 
Net income = $25,000

Therefore, the correct answer is B) $21,000.

A Company Had Credit Sales of $30,000 and Cash Sales