Based on the class text book- Principles of Managerial Finance by Gitman & Zutter - Chapter 4-Cash Flow and Financial Planning other additional readings, Solve the following problem on Cash Flow Statement. The income statement and a partial balance sheet for Jefferson Company is presented below.

Jefferson Company

Income Statement

For the Year Ended December 31, 2014

Sales $500,000

Cost of goods sold 390,000

Gross profit $ 110,000

Operating expenses:

Salaries$ 70,000

Depreciation expense 20,000

Miscellaneous 10,000 100,000

Net income $10,000

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Jefferson Company

Partial Balance Sheet

December 31, 2014

12/31/2014 12/31/2013

Cash $80,000 $65,000

Accounts receivable (net) 57,000 50,000

Inventories 102,000 86,000

Prepaid expenses 4,500 4,000

Accounts payable (merchandise) 58,000 51,000

Salaries payable 7,500 6,000

Required: Prepare the operating activities section of the statement of cash flows using the direct method.