Reference no: EM132819028

Problem - Freeport Company's income statement for last year appears below:

Income Statement

Sales $300,000

Less: Cost of goods sold 200,000

Gross margin 100,000

Less: Operating expenses 60,000

Income before income taxes 40,000

Less: Income taxes 16,000

Net income $24,000

The beginning and ending balances for last year are available for the following accounts:

	Ending balance	Beginning balance
Accounts receivable	$32,000	$40,000
Inventory	60,000	50,000
Prepaid expenses	12,000	8,000
Accumulated depreciation	(40,000)	(30,000)
Accounts payable	30,000	45,000
Accrued liabilities	16,000	10,000
Income taxes payable	2,000	5,000

Required - Using the direct method, prepare the operating activities section of the statement of cash flows.