Exercise 23-5

Grouper Companys income statement for the year ended December 31, 2017, contained the following condensed information.

Prepare the operating activities section of the statement of cash flows using the direct method.

Service revenue Operating expenses (excluding depreciation) Depreciation expense Loss on sale of equipment Income before income taxes Income tax expense Net income $841,000 $624,000 59,000 25,000 708,000 133,000 40,000 $93,000 Grouper's balance sheet contained the following comparative data at December 31. 2017 2016 Accounts receivable Accounts payable Income taxes payable $35,000 41,000 3,800 $53,000 31,000 8,000 (Accounts payable pertains to operating expenses.) GROUPER COMPANY Statement of Cash Flows (Partial)