Question: Computing and Comparing Income and Cash Flow Measures.
Penno Corporation recorded service revenues of $200,000 in 2013, of which $170,000 were on credit and $30,000 were for cash. Moreover, of the $170,000 credit sales for 2013, Penno collected $20,000 cash on those receivables before year-end 2013. The company also paid $25,000 cash for 2013 wages. Its employees also earned another $15,000 in wages for 2013, which were not yet paid at year-end 2013.
(a) Compute the company's net income for 2013.
(b) How much net cash in?ow or out?ow did the company generate in 2013? Explain why Penno's net income and net cash ?ow differ.