Statement of cash flow is one of the general-purpose financial statements. This statement indicates the inflow and outflow of cash during a particular period. The cash flows are divided into three headings; operating, investing, and financing. The operating activity section of the statement can be prepared using direct or indirect method. To prepare: The cash receipts section of the statement of cash flows for the month of January.

Question

Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find (for January only) this information: a. Sales, per the cash register tapes, of $155000, plus one sale on credit (a special situation) of $2500. b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during January cost $70,000 to purchase. c. During the month, according to the checkbook, you paid $37,000 for salaries, rent, supplies, advertising, and other expenses however, you have not yet paid the $900 monthly utilities for January. Required: On the basis of the data given (disregard income taxes), what was the amount of net income for January?

Answer 1

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Chapter 4, Problem 4.2.2E

To determine

Concept Introduction:Statement of cash flow is one of the general-purpose financial statements. This statement indicates the inflow and outflow of cash during a particular period. The cash flows are divided into three headings; operating, investing, and financing. The operating activity section of the statement can be prepared using direct or indirect method.

To prepare: The cash receipts section of the statement of cash flows for the month of January.

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Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find (for January only) this information: a. Sales, per the cash register tapes, of $155000, plus one sale on credit (a special situation) of $2500. b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during January cost $70,000 to purchase. c. During the month, according to the checkbook, you paid $37,000 for salaries, rent, supplies, advertising, and other expenses however, you have not yet paid the $900 monthly utilities for January. Required: On the basis of the data given (disregard income taxes), what was the amount of net income for January?

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