The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows:

1	Sales		$509,000.00
2	Cost of goods sold		291,000.00
3	Gross profit		$218,000.00
4	Operating expenses:
5	Depreciation expense	$39,210.00
6	Other operating expenses	105,290.00
7	Total operating expenses		144,500.00
8	Income before income tax		$73,500.00
9	Income tax expense		20,880.00
10	Net income		$52,620.00

Changes in the balances of selected accounts from the beginning to the end of the current year are as follows:

	Increase (Decrease)
Accounts receivable (net)	($10,770)
Inventories	3,820
Prepaid expenses	(4,020)
Accounts payable (merchandise creditors)	(8,660)
Accrued expenses payable (operating expenses)	1,390
Income tax payable	(3,330)

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required.

b. What does the direct method show about a companys cash flows from operating activities that is not shown using the indirect method?

Amount Descriptions

Cash paid for dividends

Cash paid for purchase of land

Cash payments for income taxes

Cash payments for merchandise

Cash payments for operating expenses

Cash received from customers

Cash received from sale of common stock

Cash received from sale of land

Net cash flow from operating activities

Net cash flow used for operating activities

a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required.

Cash Flows from Operating Activities Section

1	Cash flows from operating activities:
2
3
4
5
6

b. What does the direct method show about a companys cash flows from operating activities that is not shown using the indirect method?

With the , the cash received less the cash payments is the net cash flow from operating activities. Individual cash receipts and payments are reported in the Cash Flows from Operating Activities section.

The adjusts accrual-basis net income for revenues and expenses that do not involve the receipt or payment of cash to arrive at cash flows from operating activities.