Question

Consider the following information.

1. Service Revenue for the year = $80,000. Of this amount, $70,000 is collected during the year and $10,000 is expected to be collected next year.

2. Salaries Expense for the year = $40,000. Of this amount, $35,000 is paid during the year and $5,000 is expected to be paid next year.

3. Advertising Expense for the year = $10,000. All of this amount is paid during the year.

4 Supplies Expense for the year = $4,000. No supplies were purchased during the year.

5. Utilities Expense for the year = $12,000. Of this amount, $11,000 is paid during the year and $1,000 is expected to be paid next year.

6. Cash collected in advance from customers for services to be provided next year (Unearned Revenue) = $2,000.

Calculate operating cash flows.(List deductible values as negative amounts)

Calculate net income.(List deductible values as negtive amounts)

Answer 1

Answer:

Operating cash flows                                                   $16,000

Explanation:

The operating cash flow can be calculated using the following manner:

Service Revenue                                                       $70,000

(Amount received during the year)

Salaries Expense                                                      ($35,000)

(Paid during the year)

Advertising Expense                                                 ($10,000)

(Paid during the year)

Supplies Expense                                                          -

Utilities Expense                                                        ($11,000)

(paid during the year)

Cash collected in advance from customers                   $2,000

Operating cash flows                                                    $16,000