Lui Inc. reported the following for the fiscal year 2014:

Additional information:
1. Accounts receivable decreased by $21,000 during the year.
2. Inventory increased by $32,000 during the year.
3. Prepaid expenses decreased by $7,000 during the year.
4. Accounts payable to suppliers decreased by $5,000 during the year.
5. Accrued expenses payable increased by $8,500 during the year.
6. Interest payable increased by $3,500 during the year.
7. Income tax payable decreased by $6,500 during the year.
Instructions
Assuming the company reports under ASPE, prepare the operating activities section of the cash flow statement using (a) the indirect method or (b) the direct method, as assigned by your instructor.
TAKING IT FURTHER
Will the amount of cash provided (used) by operations always be the same amount if it is determined by using the direct method or the indirect method? Explain.

Transcribed Image Text:

LUI INC. Income Statement Year Ended May 31, 2014 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Loss on sale of equipment Profit from operations Other expenses $820,000 492,000 328,000 $162,000 ,50 9,500 2 200,000 128,000 Interest expense Profit before income taxes Income tax expense Profit 7,500 120,500 30,000 $90,500