Question: The following account balances are for the noncash current assets

The following account balances are for the noncash current assets and current liabilities of Wynn Bicycle Company for 2008 and 2009:


In addition, the income statement for 2009 is as follows:
Sales revenue ............. $110,000
Cost of goods sold ............ 85,000
Gross profit .............. $ 25,000
General and administrative expense .... $ 9,000
Depreciation expense ........... 2,000
Total operating expenses ......... $ 11,000
Income before interest and taxes ..... $ 14,000
Interest expense ............. 2,000
Income before tax ............ $ 12,000
Income tax expense .......... 4,800
Net income ............. $ 7,200

Required
A. Prepare the Operating Activities section of the statement of cash flows using the indirect method.
B. What does the use of the direct method reveal about a company that the indirect method doesnot?
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  • CreatedMarch 11, 2015
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