1. The Nowland Company reported the following items on its financial statements for the year ended December 31, 2019: Sales $780,000, Selling, General and Administrative expenses $20,000, Dividends $5,000, Cost of Goods Sold $700,000, Interest expense $15,000, and Income tax expense $12,500. What is Nowland's Net Income for 2019?
A. $22,500
B. $80,000
C. $42,500
D. $32,500
2. Upon organizing the new business, one of the owners invested Cash of $12,000 and Machinery valued at $11,300 receiving Common stock in exchange for those assets. The journal entry the business will make to record this transaction should include:
Calculate net income
Sales | 780000 |
Selling, General and Administrative expenses | -20000 |
Cost of goods sold | -700000 |
Interest expense | -15000 |
Income tax | -12500 |
Net income | 32500 |
So answer is d) $32500
Journal entry
No | General Journal | Debit | Credit |
Cash | 12000 | ||
Machinery | 11300 | ||
Common Stock | 23300 | ||
So answer is a) Debiting Cash for $12,000 and Machinery for $11,300 and Crediting Common stock for $23,300.
1. The Nowland Company reported the following items on its financial statements for the year ended...
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