Exhibit 2-1

-Refer to Exhibit 2-1.What is net income,assuming $50,000 of stock was issued and no dividends were paid?

Question

Exhibit 2-1
 
-Refer to Exhibit 2-1.What is net income,assuming $50,000 of stock was issued and no dividends were paid?

Quizplus · Accepted Answer

Net income is calculated as total revenue minus total expenses. In this exhibit, total revenue is $300,000 and total expenses are $165,000, which gives a net income of $135,000. However, $50,000 of stock was issued which is a financing activity and is not included in the net income calculation. Therefore, the net income is reduced by $50,000, giving a total of $85,000 (Option B).

Exhibit 2-1 -Refer to Exhibit 2-1.What Is Net Income,assuming $50,000 of Stock