Compute Net Income for May Based on the Following Transactions

question 14

Multiple Choice

Compute net income for May based on the following transactions:
May 1 paid $2,200 for May's rent.
May 14 paid $1,200 for two weeks wages.
May 15 performed $5,200 in consulting services on account.
May 17 billed a customer $1,500 for services performed May 16.
May 20 received $5,200 in payment for May 15 transaction.
May 22 performed services and immediately collected $2,000.
May 31 paid $500 for advertising in the local paper to take place in June.

• A) $10,200
• B) $ 5,300
• C) $ 8,700
• D) $13,900
• E) $ 7,000

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Definitions:

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and economic forces are balanced, leading to no net inclination to change.

Constant-Cost Industry

An industry in which the costs of production (including input prices) remain constant regardless of changes in the industry's output level.

Long-Run Equilibrium

A situation in which, after all adjustments have been made, all firms in a perfectly competitive market earn zero economic profit and no firm has an incentive to change its output.

Market Price

The existing rate at which a product or service may be purchased or sold within a market environment.