Alpaca Corporation had revenue of $200,000 in its first year of operations. The company has not collected on $20,000 of its sales and still owes $25,000 on $70,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $ 15,000 in salaries. Owners invested $ 20,000 in the business and $ 20,000 was borrowed on a five-year note. The company paid $2,000 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first say of business. Alpaca has an effective income tax rate of 40%.

requirement:

1. Compute net income for the first year for Alpaca Corporation.

2. Compute the cash balance at the end of the first test for Alpaca Corporation.