Q.2 The income statement of Regal Company for the current year ended June 30, 2014 and balances of selected accounts at the beginning and the end of the year are as follows: Sales Rs.872,500 Less: Cost of merchandise sold 500,000 Gross profit 372,500 Operating expenses: Depreciation expenses Rs. 32,250 Other operating expenses 213,750 Total operating expenses 246,000 Income before income tax 126,500 Income tax 30.900 Net income 95,600 End of year Beginning of year Trade receivables (Net) Rs. 90,000 Rs. 80,000 Inventories 102,500 87,500 Prepaid expenses 6,900 7.650 Accounts payable 74,200 69,700 Accrued Expenses 3,750 6,250 Income tax payable 2,225 Prepare the cash flows from operating activities using direct methods. 2.225