Data for Asquith Company are presented in P13-3B.

Instructions

Prepare the operating activities section of the statement of cash flows using the direct method.

Data From P13-3B

The income statement of Asquith Company is presented on the next page.
Additional information:
1. Accounts receivable decreased $230,000 during the year, and inventory increased $120,000.
2. Prepaid expenses increased $125,000 during the year.

3. Accounts payable to merchandise suppliers increased $50,000 during the year.
4. Accrued expenses payable increased $155,000 during the year.

Instructions
Prepare the operating activities section of the statement of cash flows for the year ended
December 31, 2014, for Asquith Company, using the indirect method.

Asquith Company Income Statement For the Year Ended December 31, 2014 Sales revenue $5,250,000 Cost of goods sold Beginning inventory Purchases $1,780,000 3,430,000 Goods available for sale 5,210,000 1,900,000 Ending inventory Total cost of goods sold 3,310,000 Gross profit Operating expenses Depreciation expense Amortization expense 1,940,000 95,000 20,000 Other expenses 945,000 1,060,000 $ 880,000 Net income