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31 August, 08:00

Carter Corporation made sales of $900 million during 2016. Of this amount, Carter collected cash for $871 million. The company's cost of goods sold was $280 million, and all other expenses for the year totaled $325 million. Also during 2016, Carter paid $375 million for its inventory and $285 million for everything else. Beginning cash was $115 million. Carter's top management is interviewing you for a job and they ask two questions:

a. How much was Carter's net income for 2016?

b. How much was Carter's cash balance at the end of 2016?

You will get the job only if you answer both questions correctly.

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  1. 31 August, 10:28
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    Answer: (a) $295 million

    (b) $326 million

    Explanation:

    Given that,

    Sales = $900 million during 2016

    Cash = $871 million

    Cost of goods sold = $280 million

    Expenses for the year totaled = $325 million

    Paid for Inventory = $375 million

    Paid for everything else = $285 million

    Beginning cash = $115 million

    (a) Net Income = Sales - Cost of goods sold - Expenses for the year totaled

    = $900 - $280 - $325

    = $295 million

    (b) Carter's cash balance at the end of 2016:

    = Cash + Beginning cash - Paid for Inventory - Paid for everything else

    = $871 + $115 - $375 - $285

    = $326 million
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