An import/export company starts operations on April 1st 2019 with a capital injection of $40,000 in cash on its bank account. On April 5th, it purchases a batch of items for $30,000, and manages to re-sell them to customer A for $38,000 on April 25th. Then it buys another batch of products on May 10th for $16,000, and sells half of them to customer B for $10,000 on the same day (May 10th). These are the only transactions that the company will conduct until the end of the fiscal year (June 30th) and it will then only resume operations on October 1st 2019.

Knowing that: The company is exempt of taxes due to its recent creation

Its suppliers are giving it 1-month supplier credit

Its customers are given credit terms of 3 months for A and 4 months for B respectively

a) Establish the income statement of the firm as of June 30th 2019

b) Reconstitute the companys bank account movements from April 1st and assess the balances of the account as of June 30th and September 30th 2019.

c) Explain the difference between cash and profit, and how this company can finance its working capital need.