The income statement and account balances for Charron Inc. are presented in E17-4.

Instructions
Prepare the operating section of a cash flow statement using the direct method.

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CHARRON INC Comparative Balance Sheet Accounts 2014 2013 Cash Trading investments Accounts receivable Inventory Prepaid expenses Accounts payable Accrued expenses payable Dividends payable Income taxes payable 939,400 12,000 52,000 32,500 7,500 43,000 5,000 24,000 6,800 $105,000 41,000 46,000 5,800 36,000 8,000 17,000 11,800 CHARRON INC. Income Statement Year Ended October 31, 2014 625,000 390,000 235,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Gain on fair value adjustment-trading investments Loss on sale of equipment Profit before income taxes Income taxes Profit $88,000 23,000 (2,000) 10,000 119,000 116,000 29,000 $ 87,000