Cash Flows from Operating Activities-Direct Method The income statement for Rhino Company for the current year ended June 30 and balances of selected accounts at the beginning and the end of the year are as follows: Sales Cost of merchandise sold Gross profit Operating expenses $175,900 60,700 $115,200 Depreciation expense $15,190 Other operating expenses 45,620 Total operating expenses Income before income tax Income tax expense Net income 60,810 $54,390 15,730 $38,660 End of Year $14,190 36,380 5,720 26,680 Beginning of Year Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) $12,350 31,650 6,290 24,760