Use the following information and prepare an Income Statement (to calculate the net profit) and a Statement of Cash Flows for the month.

Identify 2 causes for the difference between net profit and cash flow from operating activities. Describe what the Cash Flow Statement reveals.

Cash balance, start of month	25,600	Insurance expense	4,800
Cash balance, end of month	29,800	Insurance paid in advance for the next 6 months	2,800
Cash sales	82,000	Inventory purchased for cash	38,000
Collections from accounts receivable	45,000	Office expenses paid	8,000
Cost of sales	79,000	Payment on accounts payable	44,000
Credit sales	58,000	Proceeds from borrowings	53,000
Depreciation expense	2,700	Proceeds from sale of office furniture	7,000
Drawings (cash)	20,000	Purchase of office furniture and computer for cash	48,000
		Wages paid	22,000

1. Prepare an Income Statement to calculate the net profit. (Total 7 marks)

Income Statement

	$	$