Question

The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows:


Changes in the balances of selected accounts from the beginning to the end of the current year are as follows:
_______________________________________________ __Increase (Decrease)
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(11,760)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,920
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,780)
Accounts payable (merchandise creditors) . . . . . . . . . . . . . . . . (7,980)
Accrued expenses payable (operating expenses) . . . . . . . . . . . 1,260
Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,660)
a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method.
b. What does the direct method show about a company’s cash flows from operating activities that is not shown using the indirectmethod?


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  • CreatedFebruary 28, 2014
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