Question

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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