Question

Susan starts a new word processing business with $5,000. She pays $450 in rent for the first month, $1000 for wages, and $50 for phone usage. The business in the first month was a success, and she sold $1,800 worth of her word processing services. Given the above determine the following :

What was Susan's initial capital?
How much were her expenses?
What was Susan's revenue for the month?
Using the Income Statement determine what was her Net Income for the month?

Answer 1

The initial capital was $5000

The expenses for the first month were $1500

The revenue for the first month was $1800

The Net Income for the month was $300

Step-by-step explanation:

The initial capital is the money that Susan put in to start the business. Susan starts the business with a capital of $5000 as stated in the question. Thus, the initial capital is $5000

The expenses for the month were of rent, wages and phone bill. The total amount of expenses for the month was = 450 + 1000 + 50 = $1500

The revenue for the first month was $1800 as Susan sold $1800 worth of goods in this month.

The income statement for the first month is as follows,

$ $

Revenue $1800

(-) Expenses

Rent expense 450

Wages Expense 1000

Phone Expense 50 (1500)

Net Income 300