Incorporated, presents its statement of cash flows using the indirect method. The following accounts and corresponding balances
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Question:
Incorporated, presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Adamss Year and Year yearend balance sheets. Assume that Accounts Payable is used for purchases of inventory only.
Account Title Year Year
Accounts receivable $ $
Merchandise inventory
Prepaid insurance
Accounts payable
Salaries payable
Unearned service revenue
The Year income statement is shown below:
Income Statement
Sales $
Cost of goods sold
Gross margin
Service revenue
Insurance expense
Salaries expense
Depreciation expense
Operating income
Gain on sale of equipment
Net income $
Required
Prepare the operating activities section of the statement of cash flows using the direct method.
Prepare the operating activities section of the statement of cash flows using the indirect method.
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