Answered

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Reggie and Bebe own an apartment building in Portland, Oregon, with 8 identical units. They live in one and rent the remaining units. Their rental income for the year was [tex]$\$45,000$[/tex]. They incurred the following expenses for the entire building:

\begin{tabular}{lr}
Advertising for available units & \\
Maintenance & [tex]$\[tex]$850$[/tex][/tex] \\
Repairs & [tex]$\$9,000$[/tex] \\
Utilities & [tex]$\[tex]$7,500$[/tex][/tex] \\
Depreciation & [tex]$\$12,000$[/tex] \\
& [tex]$\[tex]$8,000$[/tex][/tex]
\end{tabular}

What amount of net income should Reggie and Bebe report for the current year for this rental?

Note: Round your answer to the nearest whole dollar.

A. [tex]$\$38,350$[/tex]
B. [tex]$\[tex]$12,213$[/tex][/tex]
C. [tex]$\$7,650$[/tex]
D. [tex]$\[tex]$45,000$[/tex][/tex]

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Answer :

GinnyAnswer
To determine the net income Reggie and Bebe should report for the rental units in their apartment building, follow these steps:

1. List the Total Rental Income:
- Rental income from the remaining 7 units: [tex]$45,000. 2. List the Expenses Incurred: - Maintenance: $[/tex]850.
- Repairs: [tex]$9,000. - Utilities: $[/tex]7,500.
- Depreciation: [tex]$12,000. - Advertising for available units: $[/tex]8,000.

3. Calculate the Total Expenses:
- Add up all the expenses:
[tex]\[ 850 + 9000 + 7500 + 12000 + 8000 = 37,350 \][/tex]

4. Calculate the Net Income:
- Subtract the total expenses from the rental income:
[tex]\[ 45,000 - 37,350 = 7,650 \][/tex]

Therefore, the amount of net income Reggie and Bebe should report for the current year for this rental is [tex]$7,650. The correct answer is: \[ \$[/tex] 7,650
\]

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