Preparing the Operating Activities Section of a Statement of Cash Flows
Sith Enterprises provides the following income statement for 2008:
|
Sales |
$765,200 |
|
Cost of goods sold |
375,800 |
|
Gross margin |
$389,400 |
|
Depreciation expense |
42,000 |
|
Salaries expense |
115,250 |
|
Interest expense |
10,500 |
|
Other expenses |
82,150 |
|
Income taxes expense |
39,000 |
|
Net income |
$100,500 |
In addition, the following balance sheet information is available:
|
|
Dec 31, 2008 |
Dec 31, 2007 |
|
Accounts receivable |
$43,000 |
$39,000 |
|
Inventory |
68,200 |
65,400 |
|
Prepaid other expenses |
5,400 |
7,300 |
|
Accounts payable |
46,300 |
47,500 |
|
Interest payable |
900 |
1,100 |
|
Income taxes payable |
2,850 |
4,100 |
Using the format presented in the chapter, prepare the Operating Activities section of the statement of cash flows and present that information using (a) the direct method and (b) the indirect method.