At December 31, 2017, Hawke Company reports the following results for its calendar year: Revenues of \$120,000, Expenses of \$85,000, and Dividends of \$10,000. What is the amount of net income reported on the income statement for the year ended December 31, 2017?

• A. \$120,000
• B. \$45,000
• C. \$35,000
• D. \$25,000

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the components of the income statement. Net income is calculated as Revenues minus Expenses. Dividends are not included in the calculation of net income because they are distributions of earnings, not expenses.
2. Step 2: Identify the given values from the problem. Revenues are \$120,000, Expenses are \$85,000, and Dividends are \$10,000.
3. Step 3: Apply the formula for net income: \( \text{Net Income} = \text{Revenues} - \text{Expenses} \). Using MathML, the formula is: $\mathrm{Net}\mathrm{Income}=\mathrm{Revenues}-\mathrm{Expenses}$
4. Step 4: Substitute the given values into the formula. Revenues are \$120,000 and Expenses are \$85,000. Dividends are not part of this calculation.
5. Step 5: Perform the subtraction to find the net income. The result will be the difference between Revenues and Expenses, which is \( \text{Net Income} = \$120,000 - \$85,000 \).