PROBLEM 13.4B Reporting Operating Cash Flows by the Direct Method (9) LO13-3, [C. LO13-8 The following income statement and selected balance sheet account data ure available for Royee Interiors, Ine., at December 31 , 2021. Gain on saes of markctable securitics Total revenue and gains Costs and expenses: Cost of goods sold Operating expenses Interest expense Income tax expense Total costs and expenses Net income $1,300,000 300,000 60,000 110,000 $2,698,000 Selected account balances: Accounts receivable Accrued interest receivable Inventories Short-term prepayments Aecounts payable (merchandise suppliers) Accrued operating expenses payable Accrued interest payable Acerued income taxes payable Additional Information 1. Dividend revenue is recognized on the cash basis. All other ineome statement amounts are recognized on the acerual basis. Page 620 2. Operating expenses include depreciation expense of $49,000 Instructions a. Prepare a partial statement of cash flows, including only the operating activities section of the statement and using the dircet method. Place brackets around numbers representing cash payments. Show supporting computations for the following 1. Cash received from customers. 2. Interest and dividends received 3. Cash paid to suppliers and employees: 4. Interest paid 5. Income taxes paid. b. Management of Royee Interiors, Inc, is exploring ways to increase the eash flows from operations One way that cash flows could be increased is through more aggressive collection of receivables. Assuming that management has already takch all the steps possible to increase revenue and reduce expenses, describe two other ways that cash flows from operations could be increased. PROBLEM 13.5B Reporting Operating Cash Flows by the Indirect Method () LO13-6. [\$) LO13-7 Using the information presented in Problem 13.4B, prepare a partial statement of eash ilows for the current year, showing the computation of net cash flows from operating activities using the indirect method. Explain why the increase in aceounts receivable year was subtracted from net income in computing the cash flows from operating activities