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6 February, 13:29

Carter Corporation made sales of $ 825 million during 2018. Of this amount, Carter collected cash for $ 710 million. The company's cost of goods sold was $ 290 million, and all other expenses for the year totaled $ 425 million. Also during 2018 , Carter paid $ 350 million for its inventory and $ 290 million for everything else. Beginning cash was $ 105 million. a. How much was Carter's net income for 2018?

b. How much was Carter's cash balance at the end of 2018?

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  1. 6 February, 16:18
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    Part (a) The net income of carter is $115 million.

    Part (b) The closing cash balance at the end of year is $360.

    Explanation:

    Part (a) Net Income Computation:

    Sales $825

    Cost of goods sold ($290)

    Gross Profit $535

    Other Expenses ($425)

    Net income $115 Million

    Part (b) The cash balance of Carter is not dependent on non cash flows. So the cash transactions would be considered here for cash balance computation.

    Opening Cash position $290

    Collection from Sales $710

    Inventory Invoices paid ($350)

    For Everything ($290)

    Closing Cash balance $360
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