Preparing the Operating Activities Section of the Statement of Cash Flows
Po Dr. acer Productions provides the following income statement for the year ended December 31, 2008:
|
Sales |
$1,530,600 |
|
Cost of goods sold |
895,400 |
|
Gross margin |
$ 635,200 |
|
General expenses |
255,400 |
|
Depreciation expense |
23,500 |
|
Salaries expense |
114,300 |
|
Operating income |
$ 242,000 |
|
Interest revenue |
17,250 |
|
Interest expense |
(12,500) |
|
Loss on sale of equipment |
(9,500) |
|
Income before income taxes |
$ 237,250 |
|
Income tax expense |
85,500 |
|
Net income |
$ 151,750 |
In addition, Po Dr. acer provides the following balance sheet information:
|
|
Dec 31, 2008 |
Dec 31, 2007 |
|
Accounts receivable |
$250,400 |
$225,400 |
|
Interest receivable |
2,100 |
2,250 |
|
Inventory |
74,300 |
59,550 |
|
Prepaid general expenses |
17,600 |
14,000 |
|
Accounts payable |
39,500 |
46,300 |
|
Accrued general expenses |
19,500 |
21,750 |
|
Interest payable |
900 |
1,100 |
|
Income taxes payable |
11,500 |
9,750 |
|
Salaries payable |
9,850 |
5,400 |
Instructions: Using the simultaneous analysis matrix illustrated in the text, prepare the Operating Activities section of the statement of cash flows using (1) the direct method and (2) the indirect method.