Delft Corporation was established on December 31, 20X1, by a group of investors who invested a total of $100,000 for shares of the new corporation. During the month of January, 20X2, Delft provided services to customers for which the total revenue was $40,000. Of this amount, $4,500 had not been collected by the end of January. Delft recorded salary expense of $17,000, of which 90% had been paid by the end of the month; rent expense of $3,000, which had been paid on January 1, 20X2; and other expenses of $8,500, which had been paid by check. On January 31, 20X2, Delft purchased a van by paying cash of $25,000. There were no other events that affected cash. Required:
1. In which section of the statement of cash flows would the amount of cash paid for salaries be reported?
2. In which section of the statement of cash flows would the amount of cash paid for the van be reported?
3. By how much did Delft' s cash increase or decrease during January?
4. If the amount of cash was $100,000 at the beginning of January, how much cash did Delft have at the end of the month?
5. What was Delft's profit or loss (after income tax expense) for the month of January ? The income tax rate was 25%.
6. Explain why the net increase or decrease in cash for a business generally will be different than the profit, or net loss, for the same period.

Question

Delft Corporation was established on December 31, 20X1, by a group of investors who invested a total of $100,000 for shares of the new corporation. During the month of January, 20X2, Delft provided services to customers for which the total revenue was $40,000. Of this amount, $4,500 had not been collected by the end of January. Delft recorded salary expense of $17,000, of which 90% had been paid by the end of the month; rent expense of $3,000, which had been paid on January 1, 20X2; and other expenses of $8,500, which had been paid by check. On January 31, 20X2, Delft purchased a van by paying cash of $25,000. There were no other events that affected cash. Required: 
1. In which section of the statement of cash flows would the amount of cash paid for salaries be reported?
 2. In which section of the statement of cash flows would the amount of cash paid for the van be reported? 
3. By how much did Delft' s cash increase or decrease during January? 
4. If the amount of cash was $100,000 at the beginning of January, how much cash did Delft have at the end of the month? 
5. What was Delft's profit or loss (after income tax expense) for the month of January ? The income tax rate was 25%.
 6. Explain why the net increase or decrease in cash for a business generally will be different than the profit, or net loss, for the same period.

Quizplus · Accepted Answer

The Answer of Delft Corporation was established on December 31, 20X1, by a group of investors who invested a total of $100,000 for shares of the new corporation. During the month of January, 20X2, Delft provided services to customers for which the total revenue was $40,000. Of this amount, $4,500 had not been collected by the end of January. Delft recorded salary expense of $17,000, of which 90% had been paid by the end of the month; rent expense of $3,000, which had been paid on January 1, 20X2; and other expenses of $8,500, which had been paid by check. On January 31, 20X2, Delft purchased a van by paying cash of $25,000. There were no other events that affected cash. Required: 
1. In which section of the statement of cash flows would the amount of cash paid for salaries be reported?
 2. In which section of the statement of cash flows would the amount of cash paid for the van be reported? 
3. By how much did Delft' s cash increase or decrease during January? 
4. If the amount of cash was $100,000 at the beginning of January, how much cash did Delft have at the end of the month? 
5. What was Delft's profit or loss (after income tax expense) for the month of January ? The income tax rate was 25%.
 6. Explain why the net increase or decrease in cash for a business generally will be different than the profit, or net loss, for the same period.

Delft Corporation Was Established on December 31, 20X1, by a Group