Tri Fecta had revenues of 360,000 in its first year of operations. The company h

Question

Tri Fecta had revenues of 360,000 in its first year of operations. The company had not collected on 35,000 of its sales and still owes $40,000 on $150,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid 25,000in salaries. Owners invested $40,000 in its business and 25,000 was borrowed on a five-year note. The company paid $3,000 in interest that was the amount owed for the year, and paid $8000 for a two-year insurance policy on the first day of business. Compute net income for the first year of company. Compute the cash balance at the end of the first year for Tri Fecta

Explanation / Answer

1 Sales 360000 Less: Expenses Cost of goods sold 150000 Salaries 25000 Interest 3000 Insurance 4000 Total expenses 182000 Net income 178000 2 Cash receipts: From sales 325000 =360000-35000 Owner investment 40000 Note borrowed 25000 Total Cash receipts 390000 Less: Cash disbursements Payment for merchandise 110000 =150000-40000 Salaries 25000 Interest 3000 Insurance 8000 Total Cash disbursements 146000 Cash balance at the end 244000

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