On January 1, 2012, Jack & Co. paid $15,000 cash for a one-year lease of a build

Question

On January 1, 2012, Jack & Co. paid $15,000 cash for a one-year lease of a building and $1,800 cash for a one-year insurance policy both beginning on January 1. The company purchased $80,000 of inventory on account on January 2. On January 10 a payment of $60,000 was made to the supplier. During January, cash sales totaled $80,000 and sales to customers on account totaled $76,000. Jack & Co. collected $45,000 from customers who bought on credit during January. The inventory sold in January cost Jack & Co. $87,600. Other costs incurred and paid during January were as follows: salaries, $8,000; utilities, $2,400; supplies, $1,500. Additional salaries earned by employees but not paid until February 3 totaled $1,200. Income taxes incurred but not yet paid for January sales totaled $30,000.

A. The total net cash flows in January for Jack & Co. was:

B. The total net income in January for Jack & Co. was:

Write out your work.

Explanation / Answer

Answer (A)

Answer (B)

Cash Inflows Cash Sales $80,000 Collection from customer $45,000 Total (A) $125,000 Cash outflows Lease rental $15,000 Insurance expense $1,800 Payment to supplier for purchase $60,000 Salaries paid $8,000 Utilities paid $2,400 Supplies paid $1,500 Total (B) $88,700 Net Cash Flows (A-B) $36,300

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