During October, a firm had the following transactions involving revenue and expenses. Paid $1,400 for rent for October Provided services for $3,150 in cash Paid $330 for the October telephone service Provided services for $2,300 on credit Paid salaries of $1,875 to employees Paid $430 for the monthly office cleaning service Calculate the net income or net loss for the period

Question

Business

Kristin Massey

20 December, 03:47

During October, a firm had the following transactions involving revenue and expenses. Paid $1,400 for rent for October Provided services for $3,150 in cash Paid $330 for the October telephone service Provided services for $2,300 on credit Paid salaries of $1,875 to employees Paid $430 for the monthly office cleaning service Calculate the net income or net loss for the period

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Katrina Rocha · Answer 1

Net Income = $ 1,415

Explanation:

Net income is the excess of total revenue over and above total expenses. A net loss is recorded where the total revenue is less than the total expenses.

In calculating the net loss, revenue must be captured whether or not the cash has been received for sales made. In the same manner, expenses must be accounted for irrespective of whether they have been paid for or not.

So we can calculate the net inome for the firm as follows:

Revenue $

Service 3150

Service 2300

5450

Expenses

Rent 1400

Telephone 330

Salaries 1875

Cleaning 430

4035

Net Income = 5450 - 4035 = $ 1,415