Cash Flows from Operating Activities-Direct Method The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows: $561,160 Sales Cost of goods sold Gross profit 318,630 $242,530 Operating expenses: Depreciation expense $43,060 Other operating expenses 113,840 156,900 Total operating expenses Income before income tax $85,630 Income tax expense 23,760 Net income $61,870 Changes in the balances of selected accounts from the beginning to the end of the current year are as follows: Increase/ Decrease Accounts receivable (net) Inventories $(12,440) 4,330 (4,150) Prepaid expenses Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) (8,850) 1,240