Question
Cash flows during the first year of operations for the Hanman Karoon Consulting Company were as follows Cash collected from customers. $305,000. Cash paid for rent $33,000. Cash paid to employees for services rendered during the year, $113,000. Cash paid for utilities, $43,000. In addition, you determine that customers owed the company $53,000 at the end of the year and no bad debts were anticipated. Also the company owed the gas and electric company $1,300 at year-end, and the rent payment was for a two-year period. Calculate actual net income for the year.
Explanation / Answer
Particulars Amount Cash collected from customers 305000 Customers owed the company 53000 Less: Expenses Cash paid for rent 33000 Cash paid to employees 113000 Cash paid for utilities 43000 Gas and electric company 1300 Net Income 167700