Jackson Consulting Had the Following Accounts and Balances at December

question 227

Multiple Choice

Jackson Consulting had the following accounts and balances at December 31:
$\begin{array}{lr}\text {Account}&\text {Debit}&\text {Credit}\\\text { Cash } & \$ 20,000 \\\text { Accounts Receivable } & 6,000 \\\text { Prepaid Insurance } & 1,500 \\\text { Supplies } & 5,000\\\text { Accounts Payable } & & \$ 500 \\\text { Common Stock } & & 9,000 \\\text { Retained Earnings } & & 7,200 \\\text { Dividends } & 1,000 & \\\text { Service Revenue } & & 20,000 \\\text { Utilities Expense } & 2,000 & \\\text { Salaries Expense } & 1,200 & \\\text { Totals } & \$ 36,700 & \$ 36,700 \\ \end{array}$
Using the information in the table,calculate Jackson Consulting's reported net income for the period.

• A) $16,800.
• B) $15,800.
• C) $15,300.
• D) $10,300.
• E) $23,200.

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Definitions:

Units-of-Activity Method

A depreciation technique that calculates the depreciation of an asset based on its usage, activity, or units produced instead of time.

Depreciation Rates

Percentages or methods used to systematically reduce the book value of a tangible asset over its useful life.

Double-Declining-Balance

An accelerated depreciation method that doubles the straight-line depreciation rate, reducing the asset's book value more quickly.

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation each year over the asset's useful life.