SalesTrack Company, an Ottawa-based provider of sales management services to medium- sized companies, has just finished its 2015 fiscal year, which ended on October 31. During the year, it experienced negative cash flow of $62,585 on sales of $618,325. Its wage costs for the year were $225,284, and its supplies usage was $17,427. Selling and administrative costs for the year were $126,827 and $97,626 respectively. The company is subject to an income tax rate of 28%.

Required:

1. Prepare an income statement for the 2015 fiscal year.

2. Explain how the company could have experienced a negative cash flow for the year.