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16 August, 07:32

A company had credit sales of $ 35 comma 000 and cash sales of $ 25 comma 000 during the month of May. Also during May, the company paid wages of $ 24 comma 000 and utilities of $ 9 comma 000. It also received payments from customers on account totaling $ 4 comma 600. What was the company's net income for the month?

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  1. 16 August, 10:59
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    The company's net income for the month was $27 comma 000

    Explanation:

    Net income = Total Sales - total expense

    During the month of May,

    Total Sales = credit sales + cash sales = $35,000 + $25,000 = $60,000

    The company paid wages of $ 24 comma 000, the wages expense was $ 24 comma 000.

    The company paid utilities of $ 9 comma 000, the utilities expense was $ 9 comma 000

    Total expense = wages expense + utilities expense = $24,000 + $9,000 = $33,000

    The payment that the company received from its customer was not the sales or expense. It made increase cash and reduce account receivable.

    Net income = $60,000 - $33,000 = $27,000
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