Question

uring 2013, Parker Enterprises generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $30,000, operating expenses of $12,000 and a gain on the sale of equipment of $2,000. Parker's net income is A. $16,000. B. $30,000. C. $18,000. D. $20,000.

Answer 1

The correct answer is:

$20,000 (D.)

Step-by-step explanation:

To calculate Parker's net income, we have to identify the transactions into income or expenditure, and calculate the difference between the total income and total expenditure, and this is done as follows:

Particulars Income ($) Expenditure($)

generated revenues 60,000 -

cost of goods sold - 30,000

operating expenses - 12,000

gain on equipment sale 2,000 -

Total 62,000 42,000

Net income = Total income - Total Expenditure

= 62,000 - 42,000 = $20,000 (D.)

Answer 2

The answer is B.

Step-by-step explanation:

Revenue-------------------------------------$60,000

Minus: cost of goods sold-------------$30,000

Cost of Sales ------------------------------$30,000

Less: Expenses

Operating expenses --------------------$12,000

Net income----------------------------------$18,000