The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows:Sales $574,310Cost of merchandise sold 326,100Gross profit $248,210Operating expenses: Depreciation expense$44,070 Other operating expenses116,510 Total operating expenses 160,580Income before income tax $87,630Income tax expense 24,310Net income $63,320Changes in the balances of selected accounts from the beginning to the end of the current year are as follows: Increase/ Decrease*Accounts receivable (net)$12,730* Inventories4,430 Prepaid expenses4,240* Accounts payable (merchandise creditors)9,050* Accrued expenses payable (operating expenses)1,270 Income tax payable3,040* a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Under the direct method of Cash flows, direct cash receipts and payments are calculated and…

Answered: The income statement of Booker T…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.8MCP

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

Sales			$574,310
Cost of merchandise sold			326,100
Gross profit			$248,210
Operating expenses:
	Depreciation expense	$44,070
	Other operating expenses	116,510
		Total operating expenses		160,580
Income before income tax			$87,630
Income tax expense			24,310
Net income			$63,320

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)	$12,730*
Inventories	4,430
Prepaid expenses	4,240*
Accounts payable (merchandise creditors)	9,050*
Accrued expenses payable (operating expenses)	1,270
Income tax payable	3,040*

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

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