Refer to the data for Strident Company in Exercise 15-2. The company’s income statement for the most recent year was:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . 5 80,000
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . 420,000
Selling and administrative expenses . . . . . . . 300,000
Income before taxes . . . . . . . . . . . . . . . . . . . 120,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 36,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 84,000
Required:
Using the direct method (and the data from Exercise 15-2), convert the company’s income statement to a cash basis.