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10 October, 06:40

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?

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  1. 10 October, 07:12
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    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

    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
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