During 2006, Sky Entertainment sold twenty 12-month subscriptions for its newly developed internet service. One-half of these subscriptions began on March 1, 2006 and the other one-half began on October 1, 2006. Customers are required to pay for one-half of their bill on the day the subscription starts and the other one-half is due 6 months later.
Each 12-month subscription costs $300.
ABC Company began operations in April, 2007 by selling common stock to owners in exchange for $70,000 cash. During 2007, ABC Company entered into the following transactions: 1. On April 23, ABC Company purchased inventory for $40,000 cash 2. On May 1, ABC Company purchased a three-year insurance policy for $18,000 cash 3. On June 1, ABC Company received $45,000 cash from a customer for services to be performed over the next 18 months 4. On August 1, ABC Company sold one-half of the inventory purchased on April 23 to a customer for $35,000 cash Calculate the amount of net income that ABC Company would report in its 2007 income statement after all the above transactions are recorded and all necessary adjusting entries are made at December 31, 2007. Do not use decimals in your answer.