Question

please add an explanation of why each amount in either included or excluded from the formula.

48. During the month of June, the following transactions occurred for Boring Corp.: June 1 Collected $5,000 rent from a tenant for the month of June June 15 Sold $1,000,000 in goods (inventory cost $750,000) June 17 Paid operating expenses of $50,000 arising from expenses incurred in May June 18 Collected $18,000 from customers on account June 24 Purchased $800,000 in inventory; paid 50% in cash June 28 Incurred $75,000 operating expenses June 30 Received a utilities bill ($2,000) for the month of June Net income for the month of June is: a) $178,000 b) $173,000 c) $128,000 d) $180,000

Answer 1

Amount $ Remarks Net Income for the month of June : Particulars Revenues :- Sales Revenue Less: Cost of goods sold Gross Profit Less: Operating expenses Less: Utilities expense Operating income Add: Non-Operating- Rental Income Net Income 1,000,000 Sale of goods - Income for the corp 750,000 Cost related to goods sold above 250,000 75,000 Operating expense for business 2,000 Utilities used in business 173,000 5,000 Rental income received from tenant 178,000 June-17, Operating expenses of May will not be part of June net income. Collection from customers are not part of Income statement, it is balance sheet item Purchase of Inventory and Payment of cash for inventory is not part of net income Answer is Option a)