Reference no: EM132698197

Alpaca Corporation had revenues of $230,000 in its first year of operations. The company has not collected on $19,600 of its sales and still owes $25,700 on $70,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $11,500 in salaries. Owners invested $21,000 in the business and $21,000 was borrowed on a five-year note. The company paid $4,800 in interest that was the amount owed for the year, and paid $5,700 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%.

Problem 1: Compute net income for the first year for Alpaca Corporation.

Multiple Choice

Option 1: -$140,850

Option 2: -$82,800

Option 3: -$84,510

Option 4: -$160,000