EX 2-10 Cash account balance

During the month, Lathers Co. received $400,000 in cash and paid out $290,000 in cash.
a. Do the data indicate that Lathers Co. had net income of $110,000 during the month? Explain.
b. If the balance of the cash account is $185,000 at the end of the month, what was the cash balance at the beginning of the month?

Answer:

a. The increase of $110,000 ($400,000 – $290,000) in the cash account does not 

indicate net income of that amount. Net income is the net change in all assets 

and liabilities from operating (revenue and expense) transactions. 

b. $75,000 ($185,000 – $110,000)