Compute the amount of net income assuming that it is based on the amounts (a) before adjusting entries and (b) after adjusting entries. Which net income amount is correct

Question Completion:

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Ramirez Company

                                 Unadjusted   Adjusted

1. Net income               $8,930        $3,240

2. The net income after the adjusting entries is correct.

Explanation:

a) Data and Calculations:

                            Unadjusted   Adjusted

Service revenue    $64,400      $66,220

Salary expense        55,470         55,470

Depreciation expense                   6,000

Insurance expense                            130

Income tax expense                       1,380

Accounts receivable accrued $1,820

Income Statements

                            Unadjusted   Adjusted

Service revenue    $64,400      $66,220

Salary expense        55,470         55,470

Depreciation expense                   6,000

Insurance expense                            130

Income tax expense                       1,380

Total expenses     $55,470      $62,980

Net income             $8,930         $3,240

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