Cash Flows from Operating ActivitiesDirect Method

The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows:

Sales					$385,840
Cost of merchandise sold					219,080
Gross profit					$166,760
Operating expenses:
	Depreciation expense		$29,610
	Other operating expenses		78,270
		Total operating expenses			107,880
Income before income tax					$58,880
Income tax expense					16,340
Net income					$42,540

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)	$8,550*
Inventories	2,980
Prepaid expenses	2,850*
Accounts payable (merchandise creditors)	6,080*
Accrued expenses payable (operating expenses)	850
Income tax payable	2,040*

Question Content Area

a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Booker T Industries Inc. Cash Flows from Operating Activities Section For the year ended on June 30 Cash flows from operating activities: Cash received from customers $394,390 Cash payments for merchandise 222,180] Cash payments for operating expenses 74,570X Cash payments for income taxes 14,300X Net cash flow from operating activities