Net income versus changes in cash
In 2011, Ace Company billed its customers $100,000 for services performed. The Company subsequently collected $73,000 of the amount billed. Ace incurred $69,000 of operating expenses 11 on account. Ace paid $62,000 of that amount. Ace acquired $30,000 cash from the issue of common stock. The Company invested $40,000 cash in the purchase of land.
Required
Use the preceding information to answer the following questions. (Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before answering the questions.)
a. What amount of revenue will Ace report on the 2011 income statement?
b. What is the net income for the period?
c. What amount of cash flow from revenue will Ace report on the statement of cash flows?
d. What is the net cash flow from operating activities for the period?
e. Why is the amount of net income different from the net cash flow from operating activities for the period?
f. What is the amount of net cash flow from investing activities?
g. What is the amount of net cash flow from financing activities’?
h. What amount of total equity will Ace report on the year-end balance sheet?
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