pter 2 2.4 Income Flows Versus Cash Flows he text states, "Over sufficiently long time periods, net income equals cash inflows minus cash outflows, other than cash flows with owners." Demonstrate the accuracy $50,000 each to form a new business. The owners used the amounts contributed to purchase a machine for $ cash. They estimated that the useful life of the machine was five years and the salvage value was $20,000. They rented of this statement in the following scenario: Two friends contributed 100,0o0 t the machine to a customer for an annual rental of $25,000 a year for five years. Annual cash operating costs for insurance, taxes, and other items totaled $6,000 annually. At the end of the fifth year, the owners sold the equipment for $22,000, instead of the $20,000 salvage value initially estimated. (Hint: Compute the total net income and the total cash flows other than cash flows with owners for the five-year period as a whole.) Net Common Stock Transaction or Event Cash Equipment Income Cash Contributed by Owners Purchase of Machine for Cash Recognition of Rent Revenue Recognition of Operating Expenses Recognition of Depreciation Sale of Machine Totals Use drop-down to select answers in yellow cells