Question

X Company is a service company and prepares monthly financial statements. In March, it billed customers $417,000 for services it provided; in April, it billed customers $359,000 for services it provided.

In April, the company received $284,000 from its March customers and $279,000 from its April customers.

Which of the following amounts will appear on X Company's April Income Statement and Statement of Cash Flows?

both statements, $279,000
Income Statement, $563,000; Statement of Cash Flows, $359,000
Income Statement, $563,000; Statement of Cash Flows, $776,000
Income Statement, $359,000; Statement of Cash Flows, $563,000
both statements, $359,000
Income Statement, $776,000; Statement of Cash Flows, $563,000

Answer 1

The X company is a service company which provides services to its customers. We know that we will record the sales in the month of such sales occurred. Also, cash received are recorded in the month of such amount received.

In the above question, company had service revenue $ 359,000 in April month. This amount is recorded in the income statement in the month of April itself.

The company received $ 284,000 from March's customers and $ 279,000 from April customers. So, in total we get $ 563,000 in the month of April. This total figure is recorded in the statement of cash flow in the month of April.

Hence, Option D is the correct answer.

Income statement $359,000 and statement of cash flow $563,000.

SUMMARY:

Company will record $359,000 in income statement and $563,000 in statement of cash flow. So option D is the correct answer.