Question

Dixie Duck Corporation made sales of $900 million during 2014. Of this amount, Dixie Duck collected cash for all but $28 million. The company's cost of goods sold was $255 million and all other expenses for the year totaled $425 million. Also during 2014, Dixie Duck paid $380 million for its inventory and $275 million for everything else. Beginning cash was $115 million. Dixie Duck's top management is interviewing you for a job and they ask two questions: a. How much was Dixie Duck's net income for 2014? b. How much was Dixie Duck's cash balance at the end of 20147 You will get the job only if you answer both questions correctly. (Enter all amounts in millions.)

Answer 1

Requirement a)

Calculation of net income
($ In million)
Sales revenue	$     900.00
Less: Cost of goods sold	$     255.00
Gross profit	$     645.00
Less: Other expenses	$     425.00
Net income	$     220.00

Net income for 2014= $220 Million

Requirement b)

Calculation of cash ending balance
($ In million)
Beginning cash balance	$     115.00
Add: collected from customers (900-28)	$     872.00
Total cash available	$     987.00
Less:
Cash paid for Inventory	$   (380.00)
Cash paid for other expenses	$   (275.00)
Ending cash balance	$     332.00

Cash balance at the end of 2014= $332 Million