The income statement of Country Kitchen Bakeries Inc. for the current year ended June 30 is as follows:
|
Sales
|
|
$456,000
|
|
Cost of merchandise sold
|
|
259,000
|
|
Gross profit
|
|
$197,000
|
|
Operating expenses:
|
|
|
|
Depreciation expense
|
$35,000
|
|
|
Other operating expenses
|
92,400
|
|
|
Total operating expenses
|
|
127,400
|
|
Income before income tax
|
|
$ 69,600
|
|
Income tax expense
|
|
19,300
|
|
Net income
|
|
$ 50,300
|
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)
|
$10,500*
|
|
Inventories
|
3,500
|
|
Prepaid expenses
|
3,400*
|
|
Accounts payable (merchandise creditors)
|
7,200*
|
|
Accrued expenses (operating expenses)
|
1,100
|
|
Income tax payable
|
2,400*
|
Prepare the cash flows from operating activities section of the statement of cash flows, using the direct method.