- Sung use of the Direct method. Consolidated Statement of Cash Flows Cash flows from operating activities - Direct Method Cash Received from Customers Less Cash Paid for 604801 Merchandise Purchases 326921 Selling Expenses 137395 Administrative Expenses 99566 563882 Net Cash Provided by Operating Activities 40919 Click if you would like to Show Work for this question: Open Show Work Exercise 4-10 A consolidated income statement and selected comparative consolidated balance sheet data for Palano Company and subsidiary follow: Palano Company and Subsidiary Consolidated Income Statement for the Year Ended December 31, 2015 Sales $687,500 Cost of sales 265,200 Gross profit 422,300 Operating expenses: Depreciation expense $75,000 Selling expenses 122,900 Administrative expenses 83,500 281,400 Consolidated net income 140,900 Less noncontrolling interest in consolidated net income 35,225 Controlling interest in consolidated net income $105,675 December 31 2014 2015 Accounts receivable $229,095 $311,794 Inventory 192,703 233,846 Prepaid selling expenses 26,104 29,400 Accounts payable 99,378 78,800 Accrued selling expenses 95,095 84,600 Accrued administrative expenses 55,457 39,391