E9-3B. Prepare cash from operating activities using the direct method. (LO 4)
Use the income statement for Kristen Harrison’s Cosmetics Inc. for the past year and the information from the comparative balance sheets shown for the beginning and the end of the year to prepare the operating section of the statement of cash flows using the direct method
|
Sales |
$ 1 50,000 |
|
|
Cost of goods sold |
55,000 |
|
|
Gross margin |
95,000 |
|
|
Operating expenses |
||
|
Wages |
$ 3,750 |
|
|
Rent |
1,600 |
|
|
Utilities |
850 |
|
|
Insurance |
175 |
6,375 |
|
Net income |
$ 88,625 |
|
Account |
Beginning of the Year |
End of the Year |
|
Accounts receivable |
$ 12,000 |
$ 1o,ooo |
|
Inventory |
18,200 |
19,700 |
|
Prepaid insurance |
600 |
200 |
|
Accounts payable |
8,000 |
7,400 |
|
Wages payable |
725 |
850 |
|
Utilities payable |
0 |
-275- |