Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc.
Sales ................$525,000
Cost of goods sold .........$260,000
Gross profit ..............$265,000
Operating expenses ...........$106,000
Income before income taxes ......$159,000
Income taxes ............$ 63,600
Net income ............$ 95,400
In addition, the following information related to net changes in working capital is presented.
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Depreciation expense for the year was $23,000
Deferred tax liability account increased $3,400
Required:
Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:
(a) Using the indirect method.
(b) Using the direct method.