Problem: Grania Company's income statement contained the condensed information below.
GRANIA COMPANY
Income Statement
For the Year Ended December 31, 2008
Revenues $970,000
Operating expenses, excluding depreciation $624,000
Depreciation expense 60,000
Loss on sale of equipment 16,000 700,000 Income before income taxes 270,000
Income tax expense 40,000
Net income $230,000
Grania's balance sheet contained the comparative data at December 31, shown below.
2008 2007
Accounts receivable $75,000 $60,000
Accounts payable 41,000 28,000
Income taxes payable 11,000 7,000
Accounts payable pertain to operating expenses.
Prepare the operating activities section of the statement of cash flows using the indirect
Prepare the operating activities section of the statement of cash flows using the direct method.