Question

24. Joseph Washington started Sloppy Joe's Fashion Accessories on February 1, 200X. The proprietorship has provided you with the following accounting information for the month of February in alphabetical order Cost of goods sold Depreciation Interest expense $8,500 100 1,000 Inventory Owners' equity 1200 2500 Production machine 2000 Rent expense Salaries expense 800 1,500 Sales 10,500 Utilities expense 300 I The net income or net loss for February 200X is £ Net Income of $500 Net Loss of $1,700 Net Income of $1,500 Net Loss of $1,600 a. b. с. d.

Answer 1

The correct answer is b. Net loss of $1700. Please refer following calculation:

Net Income/Loss = Sales- COGS - Depreciation - Interest Expense - Rent Expense - Salaries expense - Utilities Expense

= $(10500- 8500 - 100-1000- 800 - 1500 - 300)

= $(1700)

Other information from the table are not considered as they are balance sheet items.