Net Income
A summary of the operations of Streuling Company for the year ended May 31, 2006, is shown below.
Advertising expense . . . . . . . . . $2,760
Supplies expense . . . . . . . . . . . 37,820
Rent expense . . . . . . . . . . . . . . 1,500
Salaries expense . . . . . . . . . . . . 18,150
Miscellaneous expense . . . . . . . 4,170
Dividends . . . . . . . . . . . . . . . . . 12,400
Retained earnings (6/1/05) . . . . . 156,540
Income taxes . . . . . . . . . . . . . . . 21,180
Consulting fees (revenues) . . . . 115,100
Administrative expense . . . . . . . 7,250
Required:
Q1. Determine the net income for the year by preparing an income statement. (Assume that 3,000 shares of stock are outstanding.)
Q2. Interpretive Question: Assuming an operating loss for the year, is it a good idea for Streuling to still pay its shareholders dividends?