A firm has just ended the calendar year by selling $150,000 worth of merchandise that was purchased during the year at a cost of $112,500. Although the firm paid in full for the merchandise during the year, it has yet to collect on the sale at year end. The net profit and cash flow for the year are
A. $0 and $150,000, respectively.
B. $37,500 and – $150,000, respectively.
C. $37,500 and – $112,500, respectively.
D. $150,000 and $112,500, respectively.
Answer:C
A firm has just ended the calendar year by selling $150,000 worth of merchandise that was purchased during the year at a cost of $112,500. Although the firm paid in full for the merchandise during the year, it has yet to collect on the sale at year end. The net profit and cash flow for the year are
A. $0 and $150,000, respectively. B. $37,500 and – $150,000, respectively. C. $37,500 and – $112,500, respectively. D. $150,000 and $112,500, respectively.