ComparingIncome with Cash Flow (A Challenging Problem) (AP1-3)
Huang Trucking Company was organized on January 1. 201 I. At the end of the first quarter (three months) of operations, the owner prepared a summary of its activities as shown in the first row of the following tabulation:
| Computation of | |
Summary of Transactions | Income | Cash |
a. Services performed for customers, S66.000, of which $ 1 1.000 remained uncollected at the end of the quarter. | +$66,000 | +$55.000 |
b. Cash borrowed from the local bank. S45.000 (one-year note). |
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c. Small service truck purchased at the end of the quarter to be used in the business for two years starting the next quarter: cost. S9.500 cash. |
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d. Wages earned by employees, $21.000. of which one-half remained unpaid at the end of the quarter. |
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e. Service supplies purchased for use in the business. $3,800 cash, of which $900 were unused (still on hand) at the end of the quarter. |
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f. Other operating expenses, $39,000. of which $6,500 remained unpaid at the end of the quarter. |
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Based only on these transactions, compute the following for the quarter: Income (or loss) Cash inflow (or outflow) |
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Required:
1. For each of the six transactions given in this tabulation, enter what you consider the correct amounts. Enter a zero when appropriate. The first transaction is illustrated.
2. For each transaction, explain the basis for your dollar responses.
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