worth of rugs from around the world, all of which were paid for prior to shipping. On receipt of

the rugs, the importer immediately resold them to local retailers for $3 million.

To allow its retail clients time to resell the rugs,

Worldwide Rugs sells to retailers on credit. Prior to the end of its business year, Worldwide Rugs collected 85% of its outstanding accounts receivable.

a. What is the accounting profit that Worldwide Rugs generated for the year

Worldwide Rugs cash flow statement for the year ended 12/31

Hint: Use the table below.

Accounting View (accrual basis)

Worldwide Rugs cash flow statement for the year ended 12/31

Sales revenue $?

Less: Costs ?

Net profit $?

Financial View (cash basis) Worldwide Rugs income statementfor the year ended 12/31

Cash inflow $?

Less: Cash outflow ?

Net cash flow $?