Repeat the requirements of P22-1 under the indirect method.

In P22-1

Shark Company provided the following balance sheet and income statement for the current year. Prepare the operating activities section of the cash flow statement using the direct method. Assume accrued expenses relate to selling, general and administrative expenses.

                               Shark Company

                            Income Statement

            For the Year Ended December 31

Sales    ……………………………………………..      $ 56,000

Cost of Goods Sold……………………………..      33,600

Gross Profit………………………………………     $ 22,400

Selling, General, and Administrative Expenses….     $ 11,600

Depreciation Expense…………………………….     6,000

Total Operating Expenses…………………………   $ 17,600

Income before Interest and Taxes…………………   $ 4,800

Interest Expense…………………………………..   $ (2,100)

Income before Tax…………………………………   $ 2,700

Income Tax Expense……………………………….  (1,334)

Net Income………………………………………...  $ 1,366

Transcribed Image Text:

Shark Company Balance Sheet At December 31 Assets Ending Beginning Current Assets Cash Accounts Receivable, net Merchandise Inventory $ 1,000 5,500 4,000 $10.500 s 5,000 3,000 1,800 Total Current Assets Noncurrent Assets Investments in Bonds Property, Plant, and Equipment-net $30,000 $50,000 $80,000 $90,500 $10,000 $60,000 $70,000 $79.800 Total Noncurrent Assets Total Assets Liabilities Current Liabilities Accounts Payable Accrued Expenses Income Taxes Payable 3.200 6,700 1.500 $11,400 $ 4400 6,550 2,450 $13.400 Total Current Liabilities Noncurrent Liabilities Notes Payable $35,000 $35,000 $46,400 $28,000 $28,000 $41.400 Total Noncurrent Liabilities Total Liabilities Shareholders' Equity Common Stock, $1 par value Additional Paid-in Capital Retained Eamings $10,000 15,334 18,786 $44,100 $90,500 $ 9,000 12.000 17,400 38,400 Total Shareholders' Equity Total Liabilities and Shareholders' Equity