Problem 4: Cash Flows Statement (Chapter 23, 25 points) The financial data of the firm X is as follows:

Firm X Income Statement For the period of 2020

Sales $352,000

Cost of goods sold 225,000

Gross profit X1?

Operating expenses 85,000

Income before income taxes X2?

Income taxes 28,000

Net income X3?

Additional data: The company also indicates that depreciation expense for the year was $16,700.

Also, the net changes in following accounts are presented below: Trang/Page: 4

Cash Debit Credit

$12,000

Accounts receivable 25,000

Inventories $19,400

Salaries payable (operating expenses) 8,000

Accounts payable 12,000

Income taxes payable 3,000

Deferred tax liability $2,600

Required: Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:

a. Calculate X1, X2, and X3 that reported on the Income Statement. (Show you work, 5 points)

b. Prepare the cash flows from operating activities using the indirect method. (Show you work, 10 points)

c. Prepare the cash flows from operating activities using the direct method. (Show you work, 10 points)