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28 October, 14:33

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders 8) paid employees' salaries of $21,000 What is Yowell's net income for Year 1?

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  1. 28 October, 14:40
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    Answer: $9,000

    Explanation:

    Given that,

    1) issued stock = $40,000

    2) borrowed = $25,000 from its bank

    3) provided consulting services = $39,000 cash

    4) paid back = $15,000 of the bank loan

    5) paid rent expense = $9,000

    6) purchased equipment = $12,000 cash

    7) paid = $3,000 dividends to stockholders

    8) paid employees' salaries = $21,000

    Yowell's net income for Year 1:

    = Cash received from consulting services - Rent expense paid - Employees salaries paid

    = $39,000 - $9,000 - $21,000

    = $9,000
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