Yowell Company Began Operations on January 1, Year 1

question 41

Multiple Choice

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions:
1) issued stock for $40,000 2) borrowed $25,000 from its bank
3) provided consulting services for $39,000 cash
4) paid back $15,000 of the bank loan
5) paid rent expense for $9,000
6) purchased equipment for $12,000 cash
7) paid $3,000 dividends to stockholders
8) paid employees' salaries of $21,000
What is Yowell's net income for Year 1?

• A) $9,000
• B) $30,000
• C) $18,000
• D) $6,000

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Definitions:

Mark-Up

The amount added to the cost price of goods to cover overhead and profit, resulting in the selling price.

Effective Tax Rate

The true percentage of earnings that a person or business pays to the government, determined by dividing their total tax contribution by their taxable income.

Consolidated Statements

Consolidated Statements are financial reports that aggregate the financial position and operating results of a parent company and its subsidiaries, presenting them as a single entity.

Unamortized Acquisition Differential

The portion of the purchase price of a company that is not yet allocated to the acquired assets or liabilities over time through amortization.