Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $8,000 of common stock to stockholders. Provided $4,300 of services on account. Paid $2,100 cash for operating expenses. Collected $2,900 of cash from accounts receivable. Paid a $200 cash dividend to stockholders. The amount of net income recognized on Nelson Company's Year 1 income statement is:

Question

Business

Eliezer Robertson

22 April, 01:11

Nelson Company experienced the following transactions during Year 1, its first year in operation. Issued $8,000 of common stock to stockholders. Provided $4,300 of services on account. Paid $2,100 cash for operating expenses. Collected $2,900 of cash from accounts receivable. Paid a $200 cash dividend to stockholders. The amount of net income recognized on Nelson Company's Year 1 income statement is:

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Clare Miranda · Answer 1

The amount of net income recognized on Nelson Company's Year 1 income statement is $2,200

Explanation:

Net income : The net income shows a difference between service revenue and operating expenses.

In mathematically,

Net income = Service Revenue - Operating Expenses

= $4,300 - $2,100

= $2,200

All other expenses like cash collected, dividend paid, common stock is irrelevant, Hence, it is not considered while computing the net income.

Thus, The amount of net income recognized on Nelson Company's Year 1 income statement is $2,200