Cash flows from operating activities (indirect and direct methods).

Presented below is the income statement of Smiling Tiger, Inc.

Sales ...............$1,020,000

Cost of goods sold .......... 640,000

Gross profit ............ $380,000

Operating expenses ......... 230,000

Income before income taxes ....... 150,000

Income taxes ............ 60,000

Net income ............ $90,000

In addition, the following information related to net changes in working capital is presented.

Depreciation expense for the year was $54,000
Deferred tax liability account increased $6,500
Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:
Using the indirect method

Debit $50,000 34,500 Credit Cash Accounts receivable Inventories Salaries payable (operating expenses) Accounts payable Income taxes payable S25,000 60,000 450,000 12,000