Net income versus changes in cash
In 2011, Lott Inc. billed its customers $56,000 for services performed. The Company collected $42,000 of the amount billed. Lott incurred $38,000 of other operating expenses on account. Lott paid $25,000 of the accounts payable. Lott acquired $30,000 cash from the issue of common stock. The Company invested $12,000 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 attempting to answer the questions.)
a. What amount of revenue will Lott report on the 2011 income statement?
b. What amount of cash flow from revenue will Lott report on the statement of cash flows?
c. What is the net income for the period?
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 amounts of total assets, liabilities, and equity will Lott report on the year-end balance sheet?
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