What is the Net Profit and Cash Flow of Johns Inc. for the Year?

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SUMMARY

Johns Inc. reported a sale of $10,000 with a total merchandise cost of $7,000 for the year. The net profit calculated is $3,000, derived from the sale amount minus the cost of goods sold. However, the cash flow from this transaction is negative $7,000, as the company has not yet collected payment from the customer despite having paid for the merchandise. The correct answer is B: net profit of $3,000 and cash flow of -$7,000.

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karush
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1. Johns Inc.has just ended the calendar year making a sale in the amount of \$10,000
of merchandise purchased during the year at a total cost of \$7,000.
Although the firm paid in full the merchandise during the year.
it has yet to collect at year end from the customer.
The net profit and cash flow from this sale for the year are.
A. \$3000 and \$10,000 respectively
B. \$3000 and -\$7,000 respectively
C. \$7,000 and -\$3,000 respectively
D. \$3000 and \$7,000 respectively

I choose B but not sure how cash flow is mesnt here
 
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B is correct.
Why are you not sure?
 
the textbook was 😰
 

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