Bantam Company Calculated Its Net Income to Be $38,775 Based

question 157

Essay

Bantam company calculated its net income to be $38,775 based on the unadjusted trial balance.The following adjusting entries were then made for:
Salaries and wages owed but not yet paid of $395.
Interest earned but not received from investments of $375.
Prepaid insurance premiums amounting to $275 have expired.
Deferred revenue in the amount of $375 has now been earned.
Required:
Determine the amount of net income (loss)that will be reported after the adjustments are recorded.

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Definitions:

Debt-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its stockholders' equity.

Pre-Tax Cost

The cost of an investment or expense before the deduction of taxation.

Unlevered Cost

The cost of capital for a company that operates without any debt, reflecting the risk of the company's equity alone.