Use This Adjusted Trial Balance to Answer the Following Question

question 55

Multiple Choice

Use this adjusted trial balance to answer the following question. $\begin{array}{c}\text {Dan's Marina}\\\text {Adjusted Trial Balance}\\\text {December 31, 2010}\\\begin{array}{|l|r|r|}\hline \text { Cash } & \$ 2,500 \\\text { Accounts Receivable } & 3,500 \\\text { Supplies } & 1,500 \\\text { Prepaid Insurance } & 2,500 \\\text { Dock } & 12,000\\\text { Accumulated Depreciation-Dock } & & \$ 3,000 \\\text { Accounts Payable } && 6,000 \\\text { Common Stock } && 10,000 \\\text { Dividends } & 4,000 & \\\text { Boat Rentals } & & 17,000\\\text { Depreciation Expense-Dock } & 1,000 & \\\text { Wages Expense } & 6,500 & \\\text { Insurance Expense } & 2,000 & \\\text { Income Taxes Expense } & 500 \\ & \$ 36,000 & \$ 36,000 \\\hline\end{array}\end{array}$

The amount of net income (or net loss) during the period is

• A) $16,000 net income.
• B) $4,500 net income.
• C) $5,000 net loss.
• D) $7,000 net income.

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Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.

Marginal Revenue

The additional income earned from selling one more unit of a good or service, a key factor in decision-making for producing additional units.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.

Price-taker Model

An economic model describing a company or entity that must accept the prevailing prices in the market of its products because it does not have the market power to change them.