Prepare cash from operating activities using the direct method. (LO 4)

Use the income statement for Kristen Harrison's Cosmetics Inc. for the past year and the information from the comparative balance sheets shown for the beginning and the end of the year to prepare the operating section of the statement of cash flows using the direct method.

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Sales $ 150,000 Cost of goods sold 55,000 Gross margin 95,000 Operating expenses Wages $3,750 Rent 1,600 Utilities Insurance Net income Account Accounts receivable. Inventory 850 175 6,375 $ 88,625 Beginning of the Year $ 12,000 18,200 Prepaid insurance Accounts payable Wages payable Utilities payable 600 8,000 725 End of the Year $10,000 19,700 200 7,400 850 0 -275-