Question

Question 1

ABC Corp. began operations during November 2016 and sells imported furniture on a retail basis. In December 2016, it sold furniture of $250,000, of which $100,000 was on credit. The cost of furniture that was sold by ABC was $200,000 and this was delivered by the supplier during December. However, the supplier has granted credit terms, according to which ABC paid $50,000 in December 2016 and it is obligated to pay remaining amount in January 2017. In addition to the purchase and sale of furniture in December, ABC paid $10,000 in cash for salaries. Further, ABC incurred utility expense of $15,000 and advertisement cost of $25,000 in December, which will be paid in January, 2017. In December, creditors were paid $50,000 for the furniture purchased and sold in November 2016 (show all your workings).

1. How much was ABC’s net cash flow for December 2016?                         [1 Mark]
2. How much was ABC’s net profit for December 2016?                                          [1 Mark]

   Question 1

   ABC Corp. began operations during November 2016 and sells imported furniture on a retail basis. In December 2016, it sold furniture of $250,000, of which $100,000 was on credit. The cost of furniture that was sold by ABC was $200,000 and this was delivered by the supplier during December. However, the supplier has granted credit terms, according to which ABC paid $50,000 in December 2016 and it is obligated to pay remaining amount in January 2017. In addition to the purchase and sale of furniture in December, ABC paid $10,000 in cash for salaries. Further, ABC incurred utility expense of $15,000 and advertisement cost of $25,000 in December, which will be paid in January, 2017. In December, creditors were paid $50,000 for the furniture purchased and sold in November 2016 (show all your workings).

3. How much was ABC’s net cash flow for December 2016?                         [1 Mark]
4. How much was ABC’s net profit for December 2016?                                          [1 Mark]

Answer 1

Sales of furniture	$             150,000
Cost of Furniture paid(-)	$               50,000
Salary Paid(-)	$               10,000
Credito's of November(-)	$               50,000
Net Cashflow	$              40,000

Sales of Furmiture	$             250,000
Cost Of Furniture(-)	$             200,000
Salary paid(-)	$         10,000.00
Utility Expence(-)	$         15,000.00
Advertisement cost(-)	$         25,000.00
Net profit	$                        -