Use the following information to answer the next three questions.
The income statement and additional data for Frances Company for the year ended December 31. 2006. Follows
|
Sales revenue |
$400,000 |
|
Cost of goods sold |
$165,000 |
|
Salary expense |
$ 70,000 |
|
Depreciation expense |
$ 55,000 |
|
Insurance expense |
$ 20,000 |
|
Interest expense |
$ 10,000 |
|
Income tax expense |
$ 18,000 |
|
Net income |
$ 62,000 |
Accounts receivable decreased by $12,000. Inventories increased by $6,000 and accounts payable decreased by $2,000. Salaries payable increased by $8,000. Prepaid insurance increased by $4,000. Interest expense and income tax expense equal their cash amounts. Frances Company uses the direct method for its statement of cash flows.