HWI $-$ Chapter $1$ Homework $($i$)$

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E$1-6($Algo$)$ Analyzing Revenues and Expenses and Preparing an Income Statement LO$1-1$

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Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find $($for January only$)$ this information:

a$.$ Sales, per the cash register tapes, of $$116,000,$ plus one sale on credit $($a special situation$)$ of $$4,500.($Hint: Both Cash and Credit sales are regarded as sales. The only difference is that credit sales will entitle the firm to cash collection in the near future.$)$

b$.$ With the help of a friend $($who majored in accountingl, you determine that all of the goods sold during January cost $$47,000$ to purchase.

c$.$ During the month, according to the checkbook, you paid $$38,000$ for salaries, rent, supplies, advertising, and other expenses; however, you have not yet paid the $$700$ monthly utilities for January.

Required:

On the basis of the data given $($disregard income taxes$),$ what was the amount of net income for January?

Hint: Remember the second accounting equation that you learned this week? Revenues and Expenses lead to net income If you are still confused, there is a "Hint" video which you can click and watch. The video illustrates the idea of Net income calculation. To locate the Hint video, click "Hint" on the left panel to this question.

Net income