12-6

St Other operating expenses Operating income Nonoperating items: Interest revenue Net income (420,000) (110,000) 120,000 15,000 $ 135,000 Required a. Use the direct method to compute the amount of cash inflows from operating activities. b. Use the direct method to compute the amount of cash outflows from operating activities. Exercise 12-6B Direct versus indirect method of determining cash flows from operating activities Ragg Shop, Inc. (RSI) recognized $3,800 of sales revenue on account and collected $2,950 of cash from accounts receivable. Further, RSI recognized $1,200 of operating expenses on account and paid $900 cash as partial settlement of accounts payable. Statemes Required Based on this information alone: a. Prepare the operating activities section of the statement of cash flows under the direct method. b. Prepare the operating activities section of the statement of cash flows under the indirect method. Exercise 12-7B The direct versus the indirect method of determining cash flows from operating activities The following accounts and corresponding balances were drawn from Geneses Company's Year 2 and Year 1 year-end balance sheets: Year 2 Year 1 Account Title Accounts receivable $65,000 1,400 $72,000 1950