Exhibit 2-1

-Refer to Exhibit 2-1.What is net income,assuming no stock was issued and dividends of $25,000 were paid?

Question

Exhibit 2-1
 
-Refer to Exhibit 2-1.What is net income,assuming no stock was issued and dividends of $25,000 were paid?

Quizplus · Accepted Answer

Net Income = Gross Income - Expenses 
From the Exhibit, Gross Income is $300,000 and Expenses are $140,000, so Net Income is ($300,000 - $140,000) = $160,000.
Dividends paid of $25,000 need to be subtracted from Net Income to arrive at the final answer of $160,000 - $25,000 = $135,000. Therefore, the best choice is C.

Exhibit 2-1 -Refer to Exhibit 2-1.What Is Net Income,assuming No Stock Was