Question - Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc.
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Sales
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$1,020,000
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Cost of goods sold
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640,000
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Gross profit
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$380,000
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Operating expenses
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230,000
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Income before income taxes
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150,000
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Income taxes
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60,000
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Net income
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$90,000
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In addition, the following information related to net changes in working capital is presented.
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Debit
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Credit
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Cash
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$50,000
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Accounts receivable
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34,500
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Inventories
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$25,000
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Salaries payable (operating expenses)
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60,000
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Accounts payable
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450,000
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Income taxes payable
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12,000
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Depreciation expense for the year was $54,000.
Deferred tax liability account increased $6,500.
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.