P1. Cash Flows from Operating Activities: Direct Method

Tanucci Clothing Store’s income statement follows.

 

Tanucci Clothing Store Income Statement

For the Year Ended June 30, 2014

Net sales $4,900,000

Cost of goods sold:

Beginning inventory $1,240,000

Net cost of purchases 3,040,000

Goods available for sale $4,280,000

Ending inventory 1,400,000

Cost of goods sold 2,880,000

Gross margin $2,020,000

Operating expenses:

Sales and administrative salaries expense $1,112,000

Other sales and administrative expenses 624,000

Total operating expenses 1,736,000

Income before income taxes $ 284,000

Income taxes 78,000

Net income $ 206,000

 

 

 

 

 

 

 

 

 

 

 

 

? 1: Total operating activities:

$548,000 inflows

? 1: Total financing activities:

$260,000 outflows

 

Additional information: (a) other sales and administrative expenses include depreciation expense of $104,000 and amortization expense of $36,000; (b) accrued liabilities for salaries were $24,000 less than the previous year, and prepaid expenses were $40,000 more than the previous year; and (c) during the year accounts receivable (net) increased by $288,000, accounts payable increased by $228,000, and income taxes payable decreased by $14,400.

REquIRED

Using the direct method, prepare a schedule of cash flows from operating activities.