Iras Insurance Agency prepares monthly financial statements. Presented below is an income statement for the month of June.

IRAS INSURANCE AGENCY

Income Statement

For the Month Ended June 30

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Revenues

Revenue ......................................................................................... $40,000

Expenses

Salaries and Wages Expense ......................................................... $12,000

Advertising Expense ...................................................................... 800

Rent Expense ................................................................................. 4,200

Depreciation Expense .................................................................... 2,800

Total Expenses ............................................................................... 19,800

Net Income ............................................................................................. $20,200

When the income statement was prepared, the company accountant neglected to take into consideration the following information:

1. The agency purchased a new car at the beginning of the month for $24,000 cash. The car will depreciate $6,000 per year.

2. Salaries owed to employees at the end of the month total $5,300. The salaries will be paid on July 5.

3. A one year auto insurance policy was sold on June 1 for $2,400.

The correct net income for the month of June is:

• A. $14,600
• B. $17,000
• C. $14,400
• D. $9,100