Reference no: EM132513937

Consider the following income statement:

Net sales                             $10,000

Cost of goods sold                  (1,500)

Gross margin                           8,500

Operating expenses               $2,000

Depreciation expense               900

(2,900)

Income before taxes                  5,600

Income taxes                          (1,600)

Net income                               $4,000

• All sales were on credit and accounts receivable increased by $600 in 2021 compared to 2020. Merchandise purchases were on credit with an increase in accounts payable of $400 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash.

Requirements: Determine the following:

(1) Increase (decrease) in operating assets:

(2) Increase (decrease) in operating liabilities:

(3) Net cash flows from operations: