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Figure 12.5

9) Operating Activities Section Using the Indirect Method. The following income statement and current sections of the balance sheet are for Donzi Inc. Donzl, Inc. Income Statement for the Year Ended December 31, 2012 Sales Cost of goods sold Gross margin Selling and administrative expenses Depreciation expense Operating income Gain on sale of equipment Income before taxes Income tax expense Net income $650,000 410,000 $240,000 89,000 21,000 $ 130,000 1,600 $131,600 46,600 5 85,000 December 31 2012 2011 Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses 32,000 8,000 16,000 2,700 $ 40,000 10,000 12,500 4,000 Current liabilities Accounts payable Income tax payable 4,500 2,200 3,700 1,800 Required Using the indirect method, prepare the operating activities section of the statement of cash flows for Donzi Inc., for the year ended December 31, 2012. Use the format presented in Figure 12.5