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Computing and Comparing Income and Cash Flow Measures Penno Corporation recorded service revenues of $260,000 during the current year, of which $221,000 were on credit and $39,000 were for cash. Moreover, of the $221,000 credit sales, Penno collected $26,000 cash on those receivables before year-end. The company also paid $32,500 cash wages during the year. Its employees also earned another $19,500 in wages during the last few weeks of the year, which were not yet paid at year end. Required a. Compute the company's net income for the year. 208,000 b. How much net cash inflow or outflow did the company generate during the year? Explain why Penno's net income and net cash flow differ. Note: Do not use a negative sign. Net cash inflow of $ 32,500 Cash inflow from services rendered will be $ 52,000 x less collected $ 52,000 x of revenues in cash but reported $227,500 Cash outflow for wages paid will be $13,000 x less remained unpaid at year-end. than service revenue per the income statement because Penno X as revenue. than wages expense on the income statement because $ 19,500 The combined effects of these two items yields an overall difference of $ 65,000 x between net income and net cash inflow [$ 208,000 net income and $ 65,000 Xnet cash inflows]. Check

Computing and Comparing Income and Cash Flow Measures Penno Corporation recorded service revenues of $260,000 during the current year, of which $221,000 were on credit and $39,000 were for cash. Moreover, of the $221,000 credit sales, Penno collected $26,000 cash on those receivables before year-end. The company also paid $32,500 cash wages during the year. Its employees also earned another $19,500 in wages during the last few weeks of the year, which were not yet paid at year end. Required a. Compute the company's net income for the year. 208,000 b. How much net cash inflow or outflow did the company generate during the year? Explain why Penno's net income and net cash flow differ. Note: Do not use a negative sign. Net cash inflow of $ 32,500 Cash inflow from services rendered will be $ 52,000 x less collected $ 52,000 x of revenues in cash but reported $227,500 Cash outflow for wages paid will be $13,000 x less remained unpaid at year-end. than service revenue per the income statement because Penno X as revenue. than wages expense on the income statement because $ 19,500 The combined effects of these two items yields an overall difference of $ 65,000 x between net income and net cash inflow [$ 208,000 net income and $ 65,000 Xnet cash inflows]. Check

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter21: The Statement Of Cash Flows
Section: Chapter Questions
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Computing and Comparing Income and Cash Flow Measures Penno Corporation recorded service revenues of $260,000 during the current year, of which $221,000 were on credit and $39,000 were for cash. Moreover, of the $221,000 credit sales, Penno collected $26,000 cash on those receivables before year-end. The company also paid $32,500 cash wages during the year. Its employees also earned another $19,500 in wages during the last few weeks of the year, which were not yet paid at year end. Required a. Compute the company's net income for the year. 208,000 b. How much net cash inflow or outflow did the company generate during the year? Explain why Penno's net income and net cash flow differ. Note: Do not use a negative sign. Net cash inflow of $ 32,500 Cash inflow from services rendered will be $ 52,000 x less collected $ 52,000 x of revenues in cash but reported $227,500 Cash outflow for wages paid will be $13,000 x less remained unpaid at year-end. than service revenue per the income statement because Penno X as revenue. than wages expense on the income statement because $ 19,500 The combined effects of these two items yields an overall difference of $ 65,000 x between net income and net cash inflow [$ 208,000 net income and $ 65,000 Xnet cash inflows]. Check
Transcribed Image Text:Computing and Comparing Income and Cash Flow Measures Penno Corporation recorded service revenues of $260,000 during the current year, of which $221,000 were on credit and $39,000 were for cash. Moreover, of the $221,000 credit sales, Penno collected $26,000 cash on those receivables before year-end. The company also paid $32,500 cash wages during the year. Its employees also earned another $19,500 in wages during the last few weeks of the year, which were not yet paid at year end. Required a. Compute the company's net income for the year. 208,000 b. How much net cash inflow or outflow did the company generate during the year? Explain why Penno's net income and net cash flow differ. Note: Do not use a negative sign. Net cash inflow of $ 32,500 Cash inflow from services rendered will be $ 52,000 x less collected $ 52,000 x of revenues in cash but reported $227,500 Cash outflow for wages paid will be $13,000 x less remained unpaid at year-end. than service revenue per the income statement because Penno X as revenue. than wages expense on the income statement because $ 19,500 The combined effects of these two items yields an overall difference of $ 65,000 x between net income and net cash inflow [$ 208,000 net income and $ 65,000 Xnet cash inflows]. Check
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