Consider the following information. 1. Service Revenue for the year = $80,000. O
ID: 2415000 • Letter: C
Question
Consider the following information.
1.
Service Revenue for the year = $80,000. Of this amount, $70,000 is collected during the year and $10,000 is expected to be collected next year.
2.
Salaries Expense for the year = $40,000. Of this amount, $35,000 is paid during the year and $5,000 is expected to be paid next year.
3.
Advertising Expense for the year = $10,000. All of this amount is paid during the year.
4
Supplies Expense for the year = $4,000. No supplies were purchased during the year.
5.
Utilities Expense for the year = $12,000. Of this amount, $11,000 is paid during the year and $1,000 is expected to be paid next year.
6.
Cash collected in advance from customers for services to be provided next year (Unearned Revenue) = $2,000.
.
1) Calculate operating cash flows.(List deductible values as negative amounts.)
service revenue for the year
salaries expense for the year
advertising expense for the year
supplies expense for the year
utilities expense for the year
cash collected in advance for customers
net operating cash flows
2.
Calculate net income. (List deductible values as negative amounts.)
service revenue for the year
salaries expense for the year
advertising expense for the year
supplies expense for the year
utilities expense for the year
cash collected in advance for customers
net income
Consider the following information.
Explanation / Answer
(1) Operating cash flows:
(Since no supplies were purchased during year, no cash was paid for supplies and it is excluded from cash flow).
(2) Net Income
Note: Net income is computed on accrual basis, so expenses are considered (and not cash paid). Also, deferred revenue has not been considered.
Operating Cash Flows (A) Cash Inflows $ Revenue from Services: Collected (A) 70,000 Unearned Revenue (B) 2,000 Total Cash Inflows: (C) = (A) + (B) 72,000 (B) Cash Outflows Salaries expense (D) -35,000 Advertising Expense (E) -1,000 Utility Expense (F) -11,000 Total Cash Outflows: (G) = (D) + (E) + (F) -47,000 Net Cash Inflow: (H) = (C) - (G) 25,000Related Questions
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