Before any month-end adjustments are made, the net income of Lawrence Company is $550,000. However, the following adjustments are necessary: office supplies used, $35,000; services performed for clients but not yet recorded or collected, $12,300; interest accrued on note payable to bank, $14,100. After adjusting entries are made for the items listed above, Lawrence Company's net income would be:
A) $541,400.
B) $488,600.
C) $583,200.
D) $513,200.

Question

Quizplus · Accepted Answer

Net income before adjustments = $550,000
Adjustments:
- Office supplies used = $35,000 (expense)
- Services performed but not yet recorded or collected = $12,300 (revenue)
- Interest accrued on note payable to bank = $14,100 (expense)

Adjusted net income = $550,000 - $35,000 + $12,300 - $14,100 
= $513,200

Before Any Month-End Adjustments Are Made, the Net Income of Lawrence