Cash Flows from (Used for) Operating Activities-Direct Method The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows: Sales Cost of merchandise sold Gross profit $375,680 213,310 $162,370 Operating expenses: Depreciation expense $28,830 Other operating expenses 76,210 Total operating expenses 105,040 Income before income tax $57,330 Income tax expense Net income 15,910 $41,420 Changes in the balances of selected accounts from the beginning to the end of the current year are as follows: Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) Income tax payable Increase Decrease $(8,330) 2,900 (2,780) (5,920) 830 (1,990) a. Prepare the Cash Flows from (used for) 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 (used for) 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 paid is the net cash flows from operating activities. Individual cash receipts and payments are reported in the Cash Flows from (used for) Operating Activities section. The from operating activities. adjusts accrual basis net income for revenues and expenses that do not involve the receipt or payment of cash to arrive at net cash flows