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Question 3 Presented below is the income statement of Karen, Inc.: Sales revenue Cost of goods sold Gross profit Operating expenses Income before income taxes
Question 3 Presented below is the income statement of Karen, Inc.: Sales revenue Cost of goods sold Gross profit Operating expenses Income before income taxes Income taxes Net income $388,500 229,000 $159,500 91,600 67,900 23,500 $ 44,400 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $11,500 Accounts receivable 25,800 Inventories $19,700 Salaries payable (operating expenses) 8,500 Accounts payable 13,700 Income taxes payable 3,200 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,600. Prepare a schedule computing the net cash flow from operating activities by using the indirect method that woul be shown on a statement of cash flows. (Show amounts that decrease cash flow with either a - sign e.g. -10,000 or in parenthesis e.g. (10,000).) Karen, Inc. Statement of Cash Flows (Partial) (Indirect Method) Cash Flows from Operating Activities v Net Income Adjustments to reconcile net income to Cash Flows from Investing Activities Prepare a schedule computing the net cash flow from operating activities by using the direct method that would be shown on a statement of cash flows. Karen, Inc. Statement of Cash Flows (Partial) Direct Method $
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