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


Sales $515,500.00

2 Cost of goods sold 288,200.00

3 Gross profit $227,300.00

4 Operating expenses:

5 Depreciation expense $38,480.00

6 Other operating expenses 105,170.00

7 Total operating expenses 143,650.00

8 Income before income tax $83,650.00

9 Income tax expense 21,410.00

10 Net income $62,240.00

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) ($12,370)

Inventories 4,860

Prepaid expenses (3,600)

Accounts payable (merchandise creditors) (8,750)

Accrued expenses payable (operating expenses) 1,120

Income tax payable (2,650)

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.

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

 What does the direct method show about a company's 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.

explanation please!

2) Statement of Cash FlowsDirect Method

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows:

  Dec. 31, 20Y6 Dec. 31, 20Y5


Cash $258,340  $243,370 

Accounts receivable (net) 93,590  87,410

 Inventories 264,190  258,780

 Investments 0  100,260 

Land 135,510  0 

Equipment 291,490  228,800 

Accumulated depreciation (68,240)  (61,700) 

 Total assets $974,880  $856,920   

 Liabilities and Stockholders' Equity  

Accounts payable (merchandise creditors)$176,450  $168,810 

Accrued expenses payable (operating expenses)17,550  22,280 

Dividends payable 9,750  7,710 

Common stock, $10 par 52,640  41,990

 Paid-in capital: Excess of issue price over par-common stock 197,900  116,540 

Retained earnings 520,590  499,590 

 Total liabilities and stockholders' equity $974,880  $856,920 

The income statement for the year ended December 31, 20Y6, is as follows:

Sales   $1,348,630

Cost of goods sold   555,300

Gross profit   $793,330

Operating expenses:    

Depreciation expense $6,540   

Other operating expenses 700,460    

Total operating expenses   707,000

Operating income   $86,330

Other expense:     

Loss on sale of investments   (27,070)

Income before income tax   $59,260

Income tax expense  18,960

Net income   40,300

Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:

  1. Equipment and land were acquired for cash.
  2. There were no disposals of equipment during the year.
  3. The investments were sold for $73,190 cash.
  4. The common stock was issued for cash.
  5. There was a $19,300 debit to Retained Earnings for cash dividends declared.


Prepare statement of cash flows, using the direct method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Please explanation

Top Answer

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Cash Received From Customers
3 Cash Paid to Suppliers
Cash Paid for Operating Expenses
Cash Paid for Income Tax
Net Cash From...

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