Cash flows from Operating Activities

Income Statement Indirect Method Direct Method

Net income

Adjustments:

Sales $311 Decrease in accounts receivable 7 Cash received from customers

Gain on sale of equipment 25 Gain on sale of equipment (25) (Not reportedno cash effect)

Cost of goods sold Increase in inventory (13)

Increase in accounts payable 19 Cash paid to suppliers (175)

Salaries expense (44)

7 Cash paid to employees (37)

Depreciation expense (10) Depreciation expense 10 Cash paid for depreciation

Interest expense Decrease in bond discount 4 Cash paid for interest (10)

Insurance expense (23) Decrease in prepaid insurance 10 Cash paid for insurance

Loss on sale of land (7) Loss on sale of land 7 (Not reportedno cash effect)

Income tax expense (29) Increase in income tax payable Cash paid for income taxes (22)

Net Income $223 Net cash flows from operating activities $26 Net cash flows from operating activities $-244