During 2014, Wimbrow Images Reported $60,000 of Net Income and Generated

question 57

Essay

During 2014, Wimbrow Images reported $60,000 of net income and generated $80,000 of cash from operations.
During the year, Wimbrow Images paid $15,000 to purchase a new delivery truck and also paid dividends in the amount of $30,000. Wimbrow Images borrowed $40,000 cash from the bank. At the beginning of the year, cash amounted to $50,000.
A Prepare a statement of cash flows for the year ended December 31, 2014.
B How much more cash does Wimbrow Images have available at the end of the year than at the beginning?
C Why is there a difference between net income and cash flows from operations?

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Definitions:

Drawer

A drawer is a person or entity that issues or writes a check or draft, instructing a bank or similar institution to pay a specific amount of money to a designated party.

Drawee

The party on whom a cheque or draft is drawn, responsible for paying the specified amount on the instrument.

Payee

The party in a financial transaction who receives the payment.

Unconditional Promise

A firm commitment or guarantee without any stipulations or requirements for its fulfillment.