4. Financial statementsYour boss delegated a task to you because he is too busy to get everything done. He isconcerned about cash flow and the profitability of the division because many employeesare working overtime. He provides you with the income statement and statement ofcash flows below and on page 3 to analyze. Interpret and briefly discuss bothstatements and explain why Net Income is positive but Cash Flow is negative.а.Income StatementMarch 31 - June 30, 2020RevenuesSales3,500,000Shipping115,000Total Revenues2$3,615,000Cost of Goods sold1,800,000Gross Profit1,815,000Operating ExpensesOffice SuppliesPayrollTotal Expenses13,5001,500,0002$1,513,500Net Income2$301,500.00Statement of Cash Flowsfor the Quarter Ended June 30, 2020Cash flows from Operations$ 2,750,000$(1,800,000)Cash received from customersCash paid to suppliersCash paid to employees$(1,500,000)Net cash from operations$ (550,000)Cash flows from InvestingProceeds from sale of equipment$ 120,000$ (200,000)Purchase of equipmentNet cash from investing$(80,000)$ (630,000)$ 654,000Net change in cashCash balance (beginning of period)Cash balance (end of period)24,0002.

Cash Flow Statement Cash flow statement is a financial statement that explains how changes in…

a. Your boss delegated a task to you because he is too busy to get everything done. He is concerned about cash flow and the profitability of the division because many employees are working overtime. He provides you with the income statement and statement of cash flows below and on page 3 to analyze. Interpret and briefly discuss both statements and explain why Net Income is positive but Cash Flow is negative.

a. Your boss delegated a task to you because he is too busy to get everything done. He is concerned about cash flow and the profitability of the division because many employees are working overtime. He provides you with the income statement and statement of cash flows below and on page 3 to analyze. Interpret and briefly discuss both statements and explain why Net Income is positive but Cash Flow is negative.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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