Chapter 8 Quiz

On January 1, Year 1, Jing Company purchased office equipment that cost $36,000 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $4,000. The equipment had a five-year useful life and a $10,000 expected salvage value.

Assume that Jing Company earned $40,000 cash revenue and incurred $29,000 in cash expenses in Year 3. The company uses the straight-line method. The office equipment was sold on December 31, Year 3 for $18,000. What is the companys net income (loss) for Year 3?

$5,000

($5,000)

$1,000

$7,000