Newcomb Manufacturing Company was started on January 1, 2018, when it acquired $5,000 cash from the issue of common stock. During the first year of operation, $1,600 of direct raw materials was purchased with cash, and $1,200 of the materials was used to make products. Direct labor costs of $2,000 were paid in cash. Newcomb applied $1,280 of overhead cost to the Work in Process account. Cash payments of $1,280 were made for actual overhead costs. The company completed products that cost $3,200 and sold goods that had cost $2,400 for $4,000 cash. Selling and administrative expenses of $960 were paid in cash.

Required

a. Open T-accounts and record the events affecting Newcomb Manufacturing. Include closing entries.

b. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.

c. Explain the difference between net income and net cash flow.