Thomas Book Sales, Inc., supplies textbooks to college and
university bookstores. The books are
shipped with a proviso that they must be paid for within 30 days but can be
returned for a full refund credit within 90 days. In 2014, Thomas shipped and billed book
titles totaling $620 comma 000620,000. Collections, net of return credits,
during the year totaled $558 comma 584558,584.
The company spent $236 comma 974236,974 acquiring the books that it
shipped.
a. Using accrual accounting and the preceding values, show
the firm's net profit for the past year.
b. Using cash accounting and the preceding values, show
the firm's net cash flow for the past year.
c. Which of these statements is more useful to the financil
manager? Why?
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