Problem -
Service Revenue $840,000
Operating exepnses $624,000
Depreciation expense 60,000
Loss on sale of equipment 26,000 710,000
Income before income taxes 130,000
Income tax expense 40,000
Net income $90,000
2012 2011
Accounts receivable $37,000 $59,000
Accounts payable 46,000 31,000
Income taxes payable 4,000 8,500
Prepare the operating activities section of the statement of cash flows using the direct method.