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 $531,770 301,940 Cost of goods sold Gross profit $229,830 Operating expenses: $40,810 Depreciation expense Other operating expenses 107,880 Total operating expenses 148,690 Income before income tax Income tax expense $81,140 22,510 Net income $58,630 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 Prepaid expenses Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) Income tax payable $(11,780) 4,100 (3,930) (8,380) 1,170 (2,810) 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 out flows, 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: Net cash flow from operating activities b. What does the direct method show about a company's cash flows from operating activities that is not shown using the indirect method? With the , the cash received less the cash payments is the net cash flow from operating activities. Individual cash receipts and payments are reported in the Cash Flows from Operating Activities section. The adjusts accrual-basis net income for revenues and expenses that do not involve the receipt or payment of cash to arrive at cash flows from operating activities