EX 16-23 Cash flows from operating activities—direct method
The income statement for Kipitz Company for the current year ended June 30 and balances of selected accounts at the beginning and the end of the year are as follows:
|
Sales |
$657,800 |
|
|
Cost of merchandise sold |
227,500 |
|
|
Gross profit |
$430,300 |
|
|
Operating expenses: |
||
|
Depreciation expense |
$ 56,875 |
|
|
Other operating expenses |
170,300 |
|
|
Total operating expenses |
227,175 |
|
|
Income before income tax |
$203,125 |
|
|
Income tax expense |
58,500 |
|
|
Net income |
$144,625 |
|
|
Beginning |
||
|
End of Year |
of Year |
|
|
Accounts receivable (net) |
$ 52,975 |
$ 46,085 |
|
Inventories |
136,500 |
118,625 |
|
Prepaid expenses |
21,450 |
23,595 |
|
Accounts payable (merchandise creditors) |
99,775 |
92,625 |
|
Accrued expenses payable (operating expenses) |
28,275 |
30,875 |
|
Income tax payable |
6,500 |
6,500 |
Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method.