Gatto Production Services started the year with total assets

Gatto Production Services started the year with total assets of $120,000 and total liabilities of $65,000. The revenues and the expenses for the year amounted to $110,000 and $50,000, respectively

During the year, the company did not issue any common stock, but it distributed dividends of $70,000. Calculate Gatto’s net income for the year.
A) $60,000
B) $110,000
C) $50,000
D) $120,000

ANSWER

A .Net income = Revenues – Expenses
Net income = $110,000 – $50,000 = $60,000