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Question - X Company prepares monthly financial statements. The following transactions occurred on October 1:
paid the premium for the first year of a $5,000, four-year insurance policy,
paid cash for equipment that cost $20,000; the equipment has a life of four years and salvage value at that time of $2,000, and
borrowed $21,000 from a bank that will be repaid on December 31, along with interest of $88 per month.
The accountant made entries to record the transactions on October 1 and the adjustments on October 31.
Required - How was Net Income in October affected by these entries.
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