The income statement of Breckenridge Company is shown below:

Additional information:
1. Accounts receivable decreased \(\$ 300,000\) during the year.
2. Prepaid expenses increased \(\$ 150,000\) during the year.
3. Accounts payable to suppliers of merchandise decreased \(\$ 300,000\) during the year.
4. Accrued expenses payable decreased \(\$ 100,000\) during the year.
5. Administrative expenses include depreciation expense of \(\$ 60,000\).
\section*{Instructions}
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 1996, for Breckenridge Company, using the indirect method.

Transcribed Image Text:

BRECKENRIDGE COMPANY Income Statement For the Year Ended November 30, 1996 Sales $6,900,000 Cost of goods sold Beginning inventory $1,900,000 Purchases 4,400,000 Goods available for sale 6,300,000 Ending inventory 1,600,000 Cost of goods sold 4,700,000 Gross profit 2,200,000 Operating expenses Selling expenses 450,000 Administrative expenses 700,000 1,150,000 Net income $1,050,000