Question

X Company is a service company and prepares monthly financial statements. In March, it billed customers $412,000 for services it provided; in April, it billed customers $366,000 for services it provided.

In April, the company received $285,000 from its March customers and $250,000 from its April customers.

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

Income Statement, $535,000; Statement of Cash Flows, $366,000
Income Statement, $366,000; Statement of Cash Flows, $535,000
both statements, $366,000
Income Statement, $778,000; Statement of Cash Flows, $535,000
Income Statement, $535,000; Statement of Cash Flows, $778,000
both statements, $250,000

Answer 1

X Company is a service company and prepares monthly financial statements. In March, it billed customers $412,000 for services it provided; in April, it billed customers $366,000 for services it provided.

In April, the company received $285,000 from its March customers and $250,000 from its April customers.

In the income statement, revenue for services provided in the month of April will appear and in the statement of cash flow actual cash received from customers will appear.

Service revenue for April = $366,000

Cash received in April = 285,000 + 250,000

= $535,000

Thus, income statement will have service revenue of $366,000 and statement of cash flow will have actual cash received $535,000.

Second option is the correct option

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