Jing Company was started on January 1, Year 1 when it issued common stock for $32,000 cash. Also, on January 1, Year 1 the company purchased office equipment that cost $15,600 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $1,700. The equipment had a five-year useful life and a $6,100 expected salvage value.

Assume that Jing Company earned $20,600 cash revenue and incurred $13,000 in cash expenses in Year 3. Using straight-line depreciation and assuming that the office equipment was sold on December 31, Year 3 for $10,100, the amount of net income or (loss) appearing on the December 31, Year 3 income statement would be:

Multiple Choice

• $4,620.
• $2,380.
• ($1,580).
• $4,880.