The income statement for Arequipa Merchandising Corporation is as follows:

Other information is as follows:
a. Accounts payable decreased by $10,000 during the year.
b. Accounts receivable increased by $10,000.
c. All wages were paid at the beginning of the year; at the end of the year, wages payable had a balance of $6,000.
d. Prepaid insurance increased by $12,000 during the year.

Required:
Prepare a schedule that provides the operating cash flows for the year by using the indirectmethod.

Transcribed Image Text:

Arequipa Merchandising Corporation Income Statement For the Year Ended December 31, 2009 Sales Less: Cost of goods sold Beginning inventory Purchases Ending inventory $750,000 $200,000 400,000 100 (500,000) (50,000) (10,000) (40,000) Less: Depreciation expense Less: Amortization of patent Less: Wages expense Less: Insurance expense Income before taxes Less: Income taxes (all current) $ 130,000 (52,000 78,000 Net income