Question

"The following accounts were taken from an Adjusted Trial Balance:Accumulated Depreciation $4,600Service Revenue 18,000Depreciation Expense 800Rent Expense 700Prepaid Insurance 4,500Supplies 1,900Supplies Expense 4,200Net Income for the period is:

Answer 1

Answer:

Net Income for the period is $12,300.

Explanation:

All the accounts of revenue and expenses are dealt in income statement because these are the temporary accounts and need to be closed in each accounting period.

         Income Statement

                                              $

Service Revenue              18,000

Supplies Expense           (4,200)  

Gross Income                   13,800

Depreciation Expense     (800)

Rent Expense                   (700)  

Operating / Net Income 12,300

The following account are from the balance sheet account they have nothing to do with net income calculations. Accumulated Depreciation is an contra asset account. prepaid insurance is a current asset account and the supplies is also a current asset account which represents the closing Inventory of Supplies.

Accumulated Depreciation $4,600

Prepaid Insurance 4,500

Supplies 1,900