Midtown Diner Inc.purchased $10,000 of paper napkins for its restaurants.At the end of the period,three-quarters of the bill for the napkins is unpaid.An inventory revealed that 40% of the napkins were still on hand.Which of the following combinations of amounts would affect the income statement and statement of cash flows?

Question

Quizplus · Accepted Answer

The statement of cash flows would show $2,500, representing the quarter of the bill that was paid ($10,000 * 1/4). The income statement would reflect $6,000, representing the cost of the 60% of napkins used ($10,000 * 60%).