WSP ACCOUNTING -WALL STREET PREP

Assume US GAAP to answer this question. In 2017, $2 million in wages were earned and no cash wages were paid. In 2018, $8 million in wages were earned and $7 million in cash wages were paid. - Cash wages were used to first pay wages earned in 2017 with the remainder used to pay wages earned in 2018. - Any earned but unpaid wages will be paid during the first quarter of 2019. Using only the information provided, which of the following statements is most accurate? Liabilities increased by $1.0 million in 2018 Liabilities increased by $3.0 million in 2018 Assets decreased by $5.0 million in 2018 Retained earnings decreased by $10.0 million in 2018 Retained earnings decreased by $7.0 million in 2018 - answer - Liabilities increased by $1.0 million in 2018 A company reported gross profit of $20 million in 2018. In addition, it recorded the following activities: Sales and marketing expenses were $5 million. Interest income was $2 million. Sold equipment for $5 million that had a net book value of $9 million. $3 million in preferred stock issuance. Company's tax rate is 40%. Calculate the company's net income. $5.4 million $6.0 million $6.8 million $7.2 million $7.8 million - answer - $7,800,000 Gross Profit: 20,000,000 Sales and Marekting Exp: -5,000,000 = Operating Income: 15,000,000 Loss on Sale: -4,000,000 Interest Income: 2,000,000 = A