ay by T1:5pm Points 16 Submitting a text entry box or a file upload Use Example

Question

ay by T1:5pm Points 16 Submitting a text entry box or a file upload Use Example 1.3 on pages 17-18 in the book to work on the following problem: 1. Accrual income versus cash flow for a period. Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso that they must be paid for within 30 days but can be returned for a full refund credit within 90 days. In 2014, Thomas shipped and billed book titles totaling $750,000. Collections, net of return credits, during the year totaled $678,002.The company spent $288,474 acquiring the books that it shipped. a. Using accrual accounting and the preceding values, show the firm's net profit for the past year in the following table. (Round to the nearest dollar.) Accounting View (accrual basis) Sales revenue: Less: Costs Net profit:

Explanation / Answer

1) Accounting View (accrual basis) Thomas Book Sales, Inc Income Statement For the Year Ended 12/31 Sales revenue $750,000.00 Less: Costs -$288,474.00 Net Profit $461,526.00 2) Financial View (cash basis) Thomas Book Sales, Inc Cash Flow Statement For the Year Ended 12/31 Cash inflow $678,002.00 Less:Cash Outflow -$288,474.00 Net cash flow $389,528.00 3) The income Statement because it recognize revenue at the time of sale(whether payment has been received or not) and recognize expenses when they are incurred.

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