Question
Drax Corporation has the following financial statements: Drax Corporation Income Statement For the Year Ended December 31, 2020 Net sales $165,000 Cost of goods sold
Drax Corporation has the following financial statements:
Drax Corporation Income Statement | |
For the Year Ended December 31, 2020 | |
Net sales | $165,000 |
Cost of goods sold | 97,500 |
Gross profit | 67,500 |
Operating expenses | 27,500 |
Income from operations | 40,000 |
Interest expense | 3,500 |
Income before income taxes | 36,500 |
Income taxes | 11,000 |
Net income | $ 25,500 |
Drax Corporation Comparative Statement of Financial Position | ||
As at December 31 | ||
Cash | $15,000 | $9,750 |
Accounts receivable | 11,750 | 8,750 |
Inventories | 16,500 | 11,750 |
Prepaid insurance | 2,500 | 2,000 |
Equipment | 25,500 | 33,500 |
Accumulated depreciationequipment | (16,250) | (17,750) |
Total assets | $55,000 | $48,000 |
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Accounts payable | $5,000 | $6,750 |
Wages payable | 2,000 | 2,000 |
Income taxes payable | 3,000 | 1,000 |
Long-term note payable | 0 | 8,750 |
Common shares | 15,000 | 15,000 |
Retained earnings | 30,000 | 14,500 |
Total liabilities and shareholders equity | $55,000 | $48,000 |
Additional information:
Equipment that cost $8,000 was sold for the carrying amount of $3,750
Dividends declared and paid were $10,000.
Required
1. Prepare the operating activities section for the statement of cash flows using the direct method
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