Paul's Painters, a service organization, prepared the following special report for the month of January 2003:

Required: 1. The owner (who knows little about the financial part of the business) asked you to compute the amount by which cash had increased in January 2003 from the operations of the company. You decided to prepare a detailed report for the owner with the following major side captions: Cash Inflows (collections). Cash Outflows (payments), and the difference—Net Increase (or decrease)

in Cash. 2. See if you can reconcile the difference—net increase (or decrease) in cash—you computed in requirement

( 1 ) with the income for January 2003.

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Service Revenue, Expenses, and Income Service revenue Cash services (per cash register tape) Credit services (per charge bills; not yet $105,000 collected by end of January) Expenses 30,500 $135.500 Salaries and wages expense (paid by check) $ 50,000 Salary for January not yet paid 3,000 Supplies used (taken from stock. purchased for cash during December) 2.000 Estimated cost of using company-owned truck for the month (called "depreciation") Other expenses (paid by check) Pretax income Income tax expense (not yet paid) Income for January 500 26,000 81,500 $ 54,000 13,500 $ 40,500