Smiles Entertainment Had the Following Accounts and Balances at December

question 2

Multiple Choice

Smiles Entertainment had the following accounts and balances at December 31: $$\begin{array} { | l | r | r | } \hline \text { Account } & \text { Debit } & \text { Credit } \\\hline \text { Cash } & \$ 10,000 & \\\hline \text { Acoounts Receivable } & 2,000 & \\\hline \text { Prepaid Insurance } & 2,400 & \\\hline \text { Supplies } & 1,000 & \\\hline \text { Acoounts Payable } & & \$ 5,000 \\\hline \text { Common Stock } & & 4,900 \\\hline \text { Service Revenue } & & 7,000 \\\hline \text { Salaries Expense } &500 & \\\hline \text { Utilities Expense } & 1,000\\\hline \text { Totals } & \$ 16,900 & \$ 16,900 \\\hline\end{array}$$ Using the information in the table, calculate the company's reported net income for the period.

• A)$1,100.
• B)$4,000.
• C)$4,500.
• D)$10,400.
• E)$5,500.

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Definitions:

Rescission

The act of revoking, canceling, or repealing a contract, returning all parties involved to their state prior to the agreement.

Common Law

is a legal system based on customs, court rulings, and past legal precedents rather than on written laws or statutes.

Breach

The violation or non-fulfillment of a legal obligation, contract, or duty.

Nonperformance

The failure to act or perform a task or duty that is required by contract, obligation, or law.