Question

Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc. 
Sales ................ $525,000
Cost of goods sold ......... $260,000
Gross profit .............. $265,000
Operating expenses ........... $106,000
Income before income taxes ...... $159,000
Income taxes ............ $ 63,600
Net income ............ $ 95,400
In addition, the following information related to net changes in working capital is presented.


Depreciation expense for the year was $23,000
Deferred tax liability account increased $3,400

Required:
Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:
(a) Using the indirect method.
(b) Using the directmethod.


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  • CreatedAugust 26, 2013
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