Cash Flow from Operations
A consolidated income statement and selected comparative consolidated balance sheet data for Palano Company and subsidiary follow:
Palano Company and Subsidiary
Consolidated Income Statement
for the Year Ended December 31, 2010
|
Sales |
$701,000 |
|
|
Cost of sales |
263,000 |
|
|
Gross profit |
438,000 |
|
|
Operating expenses: |
||
|
Depreciation expense |
$ 76,000 |
|
|
Selling expenses |
122,000 |
|
|
Administrative expenses |
85,000 |
283,000 |
|
Consolidated net income |
155,000 |
|
|
Less noncontrolling interest in consolidated net income |
38,750 |
|
|
Controlling interest in consolidated net income |
$116,250 |
|
|
December 31 |
||
|
2009 |
2010 |
|
|
Accounts receivable |
$229,000 |
$318,000 |
|
Inventory |
194,000 |
234,000 |
|
Prepaid selling expenses |
26,000 |
30,000 |
|
Accounts payable |
99,000 |
79,000 |
|
Accrued selling expenses |
96,000 |
84,000 |
|
Accrued administrative expenses |
56,000 |
39,000 |
Required:
Prepare the cash flow from operating activities section of a consolidated statement of cash flows assuming use of the:
- Direct method.
- Indirect method.