Data for Toby Zed Company are presented in P13-3A.

Instructions

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

Data From P13-3A, 

The income statement of Toby Zed Company is presented here.

Additional information:
1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $175,000 during the year.

Toby Zed Company Income Statement For the Year Ended November 30, 2014 Sales revenue $7,500,000 Cost of goods sold Beginning inventory Purchases $1,900,000 4,400,000 Goods available for sale 6,300,000 1,400,000 Ending inventory Total cost of goods sold Gross profit Operating expenses 4,900,000 2,600,000 1,150,000 $1,450,000 Net income