31 similar to Question Help Timlin Corporation made sales of

3-1 (similar to) Question Help Timlin Corporation made sales of $950 million during 2016. Of this amount, Timlin collected cash for $670 million. The company\'s cost of goods sold was $280 million, and all other expenses for the year totaled $325 million. Also during 2016, Timlin paid $410 million for its inventory and $250 million for everything else. Beginning cash was $70 million. Timlin\'s top management is interviewing you for a job and they ask two questions: a. How much was Timlin\'s net income for 20167 b. How much was Timlin\'s cash balance at the end of 2016

Solution

a. Net Income for 2016 $        345 million Working: Calculation of net income does not effected by cash transaction. So,net income is calculated as follows: $ million Sales            950 Less: Cost of goods sold            280 Gross Profit            670 Less: Expenses            325 Net Income            345 b. cash balance at the end of 2016 $          80 million Working; $ million $ million Cash balance at the beginning of 2016 70 Add:Cash collection from sales 670 Total 740 Cash paid for: Inventory 410 Others 250 660 cash balance at the end of 2016 80