Question: Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc. Sales ................ $525,000 Cost of goods
Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc.
Sales ................ $525,000
Cost of goods sold ......... $260,000
Gross profit .............. $265,000
Operating expenses ........... $106,000
Income before income taxes ...... $159,000
Income taxes ............ $ 63,600
Net income ............ $ 95,400
In addition, the following information related to net changes in working capital is presented.
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Depreciation expense for the year was $23,000
Deferred tax liability account increased $3,400
Required:
Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:
(a) Using the indirect method.
(b) Using the direct method.
Credit Debit S 10,000 S 15,000 Cash Accounts receivable Inventories Salaries payable (operating expens 15,000 Accounts payable Income taxes payable S 36,000 S 23,000 S 5,000
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