Refer to the information provided in P11–3B for Software Associates.

Required:

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

P11–3B

Portions of the financial statements for Software Associates are provided below.

                 SOFTWARE ASSOCIATES
                Selected Balance Sheet Data
December 31, 2021, compared to December 31, 2020

Decrease in accounts receivable ..................... $10,000
Decrease in inventory ............................................ 13,000
Increase in prepaid rent .......................................... 3,000
Decrease in salaries payable ................................. 4,000
Increase in accounts payable ............................... 7,000
Increase in income tax payable ........................... 8,000

Transcribed Image Text:

SOFTWARE ASSOCIATES Income Statement For the year ended December 31, 2021 Net sales $710,000 Expenses: Cost of goods sold $420,000 Operating expenses Depreciation expense 130,000 33,000 Income tax expense 49,000 Total expenses 632,000 $ 78,000 Net income