Chapter 1, Problem 1.3P

Comparing Income with Cash Flow (Challenging)

Huang Trucking Company was organized on January 1. At the end of the first quarter (three months) of operations, the owner prepared a summary of its activities as shown in item (a) of the following table:

	Computation of
Summary of Transactions	Income	Cash
a. Services performed for customers. $66,000, of which $11,000 remained uncollected at the end of the quarter.	+$66,000	+$55.000
b. Cash borrowed from the local bank. $56,000 (one-year note).
c. Small service truck purchased at the end of the quarter to be used in the business for two years starting the next quarter Cost, $12,500 cash.
d. Wages earned by employees. $25,000, of which one-half remained unpaid at the end of the quarter.
e. Service supplies purchased for use in the business, $3,800 cash, of which $900 were unused (still on hand) at the end of the quarter.
f. Other operating expenses. $38,000, of which $6,500 remained unpaid at the end of the quarter.	____________	____________
g. Based only on these transactions, compute the following for the quarter: Income (or loss) Cash inflow (or outflow)	____________	____________

Required:

1. 1. For items (b) through (g), enter what you consider to be the correct amounts. Enter a zero when appropriate. The first transaction is illustrated.
2. 2. For each transaction, explain the basis for your response in requirement (1).