crual Net Income and Cash Flow (24 points total) Moon Consulting Company opened
ID: 2342170 • Letter: C
Question
crual Net Income and Cash Flow (24 points total) Moon Consulting Company opened for business on October 1,2018. Moon go ation related to October 2018: Clients paid the Company a total of $75,000 during October 2018 gives you the following received by the Company for work that will be done during Nove Company has done approximately $15,000 worth of work for ot collected in November 2018 other customers that will be The Company paid a total of $5,000 in rent on first and last month's rent for the compa October 1, 2018. This amount repre The Company paid $7,000 for supplies during October. A count of remaining su October 31, 2018 revealed that $3,000 of these supplies were stil As of October 31, 2018, October and $2,000 to the utility company for its October bill. Both tem November 2018 The Company paid a total of $50,000 to its employees for sala supplies on the company owed its employees $4,000 for salaries earned in in October 2018 The Company purchased equipment on October 1, 2018, at a total cost of $144,000. believe this asset will last an average of 6 years without any salvage value. The Company borrowed $200,000 on October 1 from the local bank at a The first interest and principal payment is due on November 1, 2018 On October 31, 2018, the Company paid $2,500 for its November 2018 rent. rate of 6 percent . . Required: a. Calculate the accrual accounting net income for Moon for October 2018. b. What is the Company's operating cash flow for October 2018?Explanation / Answer
a. Accrual accounting net income for October 2018: $14500
b. Operating cash flow for October 2018: $10500
Notes:
1. Purchase of equipment is an investing activity hence, excluded.
2. Borrowing from bank is a financing activity hence, excluded.
3. Depreciation is a non-cash expense hence, excluded.
Income Statement Revenue: Service revenue ($75000 - $10000 + $15000) 80000 Expenses: Rent expense ($5000/2) 2500 Supplies expense ($7000 - $3000) 4000 Salaries expense ($50000 + $4000) 54000 Utilities expense 2000 Depreciation expense ($144000 x 1/72) 2000 Interest expense ($200000 x 6% x 1/12) 1000 Total expenses 65500 Net income $ 14500Related Questions
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