Cash Flows from Operating Activities—Direct Method The income statement of Kodia

Question

Cash Flows from Operating Activities—Direct Method The income statement of Kodiak Industries Inc. for the current year ended June 30 is as follows:

Sales $518,260 Cost of merchandise sold 294,270 Gross profit $223,990

Operating expenses: Depreciation expense $39,770 Other operating expenses 105,140 Total operating expenses 144,910 Income before income tax $79,080 Income tax expense 21,940 Net income $57,140 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) $11,490* Inventories 4,000 Prepaid expenses 3,830* Accounts payable (merchandise creditors) 8,170* Accrued expenses payable (operating expenses) 1,140 Income tax payable 2,740* Hide Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Use the minus sign to indicate cash out flows, cash payments, and decreases in cash.

Kodiak Industries Inc. Cash Flows from Operating Activities Section For the year ended on June 30

Cash flows from operating activities:

Net cash flow from operating activities

Explanation / Answer

Particulars Amount Amount Cash From Operating activities Sales $518,260 Decrease Accounts receivable $11,490 Cash Collection $529,750 Less: Cost of merchandise sold $294,270 Increase Inventories $4,000 Decrease in Accounts payable $ 8,170 Cash Payment of Purchases -$306,440 Operating expenses $144,910 Decrease in Prepaid expenses -$3,830 Increase in expenses payable -$1,140 Cash payment for Operating expenses -$139,940 Income tax expense $21,940 Decrease in Income tax payable $2,740 Cash Payment for Income taxes -$24,680 Net Cash Flow from Operating Activities $58,690

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