Profit was positive.
Where did the cash go?
Acme Kitchens · January 1–June 30, 2026 actuals · As-of data: June 30, 2026 · Fictional demonstration company
What the records establish: Acme reported $110,298.58 in net income but cash fell $75,000.00, from $410,000.00 to $335,000.00. Gross receivables increased and older invoices remained unpaid. The bank dataset also contains $225,788.38 in synthetic balance-control entries. That prevents a verified transaction-level explanation of the cash decline until those entries are traced.
Profit compared with cash
The same January–June 2026 period. Negative figures appear in parentheses.
| Measure | Amount |
|---|---|
| Net income | $110,298.58 |
| Operating cash flow | ($75,000.00) |
| Profit less operating cash flow | $185,298.58 |
| Cash at December 31, 2025 | $410,000.00 |
| Cash at June 30, 2026 | $335,000.00 |
| Change in cash | ($75,000.00) |
Where funds appear committed
Balance sheet changes since December 31, 2025. These are directional clues, not an additive cash-flow reconciliation.
| Balance | Dec 31 | Jun 30 | Change | Cash implication |
|---|---|---|---|---|
| Accounts receivable, net | $495,000.00 | $567,000.00 | +$72,000.00 | Cash tied up |
| Inventory | $535,000.00 | $575,000.00 | +$40,000.00 | Cash tied up |
| Vendor deposits and prepaids | $180,000.00 | $205,000.00 | +$25,000.00 | Cash tied up |
| Contract assets (unbilled work) | $210,000.00 | $255,000.00 | +$45,000.00 | Cash tied up |
| Accounts payable | $510,000.00 | $610,000.00 | +$100,000.00 | Temporary cash support |
| Customer deposits / contract liabilities | $620,000.00 | $720,000.00 | +$100,000.00 | Temporary cash support |
| Accrued payroll and other current liabilities | $175,000.00 | $195,000.00 | +$20,000.00 | Temporary cash support |
Receivables, inventory, vendor prepaids, and contract assets increased by $182,000.00 combined. Payables, customer deposits, and accrued liabilities increased by $220,000.00 combined. These groups overlap with transactions below and omit other balance sheet lines, so neither sum is the cause of the reported cash change.
Bank-record check
Signed entries dated January 1–June 30, 2026, grouped by the source's cash-flow category.
| Category | Net cash |
|---|---|
| Customer collections | $1,787,631.94 |
| Customer deposits | $1,775,000.33 |
| Vendor bill payments | ($1,561,586.17) |
| Vendor deposits | ($199,221.17) |
| Payroll, tax, and benefits | ($1,651,036.55) |
| Subtotal before control entries | $150,788.38 |
| Balance-control entries (13) | ($225,788.38) |
| Net recorded cash change | ($75,000.00) |
Verification gap: The thirteen “BALANCE_CONTROL” bank entries are tagged “FINANCIAL_STATEMENT_CONTROL”, including inventory, contract-liability, and equity controls. They are reconciled in the source, but are not identifiable customer payments, vendor disbursements, or owner withdrawals. Without them, the listed operational bank categories net to a $150,788.38 inflow; with them, they reproduce the ($75,000.00) decrease. The available data therefore establishes the decline but does not substantiate a complete causal bridge from net income to cash.
Collections to investigate
Gross accounts receivable by aging bucket at June 30.
| Aging | Outstanding |
|---|---|
| Current | $73,392.01 |
| 1–30 days | $333,343.95 |
| 31–60 days | $119,855.68 |
| Over 90 days | $58,408.36 |
| Gross receivables | $585,000.00 |
Gross A/R $585,000.00 less an $18,000.00 allowance equals the $567,000.00 net A/R balance.
Glenstone Construction Studio LLC (CUS-0028), a trade account, holds all six invoices over 90 days old.
| Invoice | Project | Open balance |
|---|---|---|
| INV-2026-00081 | PRJ-2025-0342 | $20,711.32 |
| INV-2026-00021 | PRJ-2025-0249 | $8,083.22 |
| INV-2026-00007 | PRJ-2025-0203 | $7,648.93 |
| INV-2026-00005 | PRJ-2025-0189 | $7,428.63 |
| INV-2026-00017 | PRJ-2025-0241 | $7,321.63 |
| INV-2026-00002 | PRJ-2025-0183 | $7,214.63 |
| 90+ total | $58,408.36 | |
Glenstone's total open A/R is $66,093.48, including $7,685.12 aged 31–60 days. Its customer master lists a $35,000.00 approved credit limit; the open balance exceeds it by $31,093.48.
Owner priorities
- Reconcile the control entries. Determine whether the thirteen June 30 adjustments reflect actual bank activity, journal-only balance controls, or simulation balancing items. Confirm the cash-flow bridge against the bank statement and general ledger before assigning a cause to the $185,298.58 gap.
- Verify Glenstone's current status and collection plan. Check whether its $66,093.48 June 30 balance has since been paid, disputed, or credited. Then review the six 90+ day invoices and its $35,000.00 credit limit before extending further credit.
- Review project cash timing. Map the increases in A/R, inventory, vendor prepaids, and unbilled contract assets to project milestones and expected collections. Check deposit obligations and upcoming vendor payments at the same time.