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# Calculation of Net Income

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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:
1. Determine the net income for the year by preparing an income statement. (Assume that
3,000 shares of stock are outstanding.)
2. Interpretive Question: Assuming an operating loss for the year, is it a good idea for Streuling to still pay its shareholders dividends?