Cash Flows from (Used for) Operating ActivitiesDirect Method

The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows:

Sales					$576,130
Cost of merchandise sold					327,130
Gross profit					$249,000
Operating expenses:
	Depreciation expense		$44,210
	Other operating expenses		116,880
		Total operating expenses			161,090
Income before income tax					$87,910
Income tax expense					24,390
Net income					$63,520

Changes in the balances of selected accounts from the beginning to the end of the current year are as follows:

	Increase Decrease
Accounts receivable (net)	$(12,770)
Inventories	4,450
Prepaid expenses	(4,260)
Accounts payable (merchandise creditors)	(9,080)
Accrued expenses payable (operating expenses)	1,270
Income tax payable	(3,050)

a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the direct method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Booker T Industries Inc.
Cash Flows from Operating Activities Section
For the year ended on June 30
Cash flows from (used for) operating activities:
	$fill in the blank a93c2ef6a074ffd_2
	fill in the blank a93c2ef6a074ffd_4
	fill in the blank a93c2ef6a074ffd_6
	fill in the blank a93c2ef6a074ffd_8
Net cash flow from operating activities		$fill in the blank a93c2ef6a074ffd_9

b. What does the direct method show about a companys cash flows from operating activities that is not shown using the indirect method?

With the___________ , the cash received less the cash paid is the net cash flows from operating activities. Individual cash receipts and payments are reported in the Cash Flows from (used for) Operating Activities section.

The ____________adjusts accrual basis net income for revenues and expenses that do not involve the receipt or payment of cash to arrive at net cash flows from operating activities.