The following accounts and corresponding balances were drawn from Crimson Sports, Inc.s Year 2 and Year 1

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The following accounts and corresponding balances were drawn from Crimson Sports, Inc.’s Year 2 and Year 1 year-end balance sheets:

Account Title Year 2 Year 1 Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries payabl


The Year 2 income statement is shown next: Income Statement

Sales ............................................................................. $495,000
Cost of goods sold .........................................................(215,000)
Gross margin .................................................................280,000
Service revenue .............................................................20,000
Insurance expense ........................................................(42,000)
Salaries expense ...........................................................(122,000)
Depreciation expense ................................................... (12,000)
Operating income ..........................................................124,000
Gain on sale of equipment ............................................1,500
Net income ................................................................... $125,500


Required
a. Prepare the operating activities section of the statement of cash flows using the direct method.
b. Prepare the operating activities section of the statement of cash flows using the indirect method.


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Related Book For  book-img-for-question

Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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