Question
ABC company is small and is currently maintaining its books on a cash basis. The company recently borrowed $100,000 from a local bank and the
ABC company is small and is currently maintaining its books on a cash basis. The company recently borrowed $100,000 from a local bank and the bank requires ABC to provide annual financial statements to be prepared on an accrual basis. The following cash flows were recorded in 2024.
Cash collected for services to customers was $320,000
Cash paid:
| Salaries | $180,000 |
| Supplies | $25,000 |
| Rent | $12,000 |
| Insurance | $6,000 |
| Miscellaneous expenses | $20,000 |
| Total cash paid for expenses | $243,000 |
Thus, net operating cash flow: $77,000.
Here is some extra information:
| January 1, 2024 | December 31, 2024 | |
| Accounts receivable | $32,000 | $27,000 |
| Prepaid insurance | $0 | $2,000 |
| Supplies | $1,000 | $1,500 |
| Accrued liabilities (for miscellaneous expenses) | $2,400 | $3,400 |
In addition, you learn that the bank loan was dated September 30, 2024, with principal and interest at 6% due in one year. 2024 annual depreciation expense on office equipment is $10,000.
What is the companys revenues? Expenses? And Net income?
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