Reference no: EM131821833

Question - Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc.

Sales $525,000

Cost of goods sold 260,000

Gross profit $265,000

Operating expenses 106,000

Income before income taxes 159,000

Income taxes 63,600

Net income $95,400

In addition, the following information related to net changes in working capital is presented.

Debit Credit

Cash $10,000

Accounts receivable 15,000

Inventories $36,000

Salaries payable (operating expenses) 15,000

Accounts payable 23,000

Income taxes payable 5,000

Depreciation expense for the year was $23,000

Deferred tax liability account increased $3,400

Required: Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:

(a) using the indirect method.

(b) using the direct method.