Question
E4-19 Consider the following information: Service Revenue for the year =$80,000 . Of this amount, $70,000 is collected during the year and $10,000 is expected
E4-19 Consider the following information:\ Service Revenue for the year
=$80,000
. Of this amount,
$70,000
is collected during the year and
$10,000
is expected to be collected next year.\ Salaries Expense for the year
=$40,000
. Of this amount,
$35,000
is paid during the year and
$5,000
is expected to be paid next year.\ Advertising Expense for the year
=$10,000
. All of this amount is paid during the year.\ Supplies Expense for the year
=$4,000
. No supplies were purchased during the year.\ Utilities Expense for the year
=$12,000
. Of this amount,
$11,000
is paid during the year and
$1,000
is expected to be paid next year.\ Cash collected in advance from customers for services to be provided next year (Unearned Revenue)
=$2,000
.\ Required:\ Calculate operating cash flows.\ Calculate net income.\ Explain why these two amounts differ.
E4-19 Consider the following information: 1. Service Revenue for the year =$80,000. Of this amount, $70,000 is collected during the year and $10,000 is expected to be collected next year. 2. Salaries Expense for the year =$40,000. Of this amount, $35,000 is paid during the year and $5,000 is expected to be paid next year. 3. Advertising Expense for the year =$10,000. All of this amount is paid during the year. 4. Supplies Expense for the year =$4,000. No supplies were purchased during the year. 5. Utilities Expense for the year =$12,000. Of this amount, $11,000 is paid during the year and $1,000 is expected to be paid next year- 6. Cash collected in advance from customers for services to be provided next year (Unearned Revenue) =$2,000. Required: 1. Calculate operating cash flows. 2. Calculate net income. 3. Explain why these two amounts differ
E4-19 Consider the following information:\ Service Revenue for the year
=$80,000
. Of this amount,
$70,000
is collected during the year and
$10,000
is expected to be collected next year.\ Salaries Expense for the year
=$40,000
. Of this amount,
$35,000
is paid during the year and
$5,000
is expected to be paid next year.\ Advertising Expense for the year
=$10,000
. All of this amount is paid during the year.\ Supplies Expense for the year
=$4,000
. No supplies were purchased during the year.\ Utilities Expense for the year
=$12,000
. Of this amount,
$11,000
is paid during the year and
$1,000
is expected to be paid next year.\ Cash collected in advance from customers for services to be provided next year (Unearned Revenue)
=$2,000
.\ Required:\ Calculate operating cash flows.\ Calculate net income.\ Explain why these two amounts differ.
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