Reference no: EM13375573

Statement of cash flows (indirect method and direct method). The net changes in the balance sheet accounts of Keating Corporation for the year 2013 are shown below.

                            Account                                                                        Debit           Credit    

Cash                                                                                                      $82,000

Accounts receivable                                                                                  83,200

Allowance for doubtful accounts                                                                                       13,300

Inventory                                                                                                74,200

Prepaid expenses                                                                                                          22,800

Accumulated depreciation                                                                                                                                       130,000

Accounts payable                                                                                                            80,700

Income tax payable                                                                                 21,500

 

Other information - increase in retained earnings was $130,000 for the year; there was $155,300 of purchases of property plant and equipment and the company issued $85,000 of common stock during the year.

The summary income statement data for 2013 is presented below:

Sales Revenue                     $1,000,000

Operating expense                   670,000  (includes cost of goods sold)

Depreciation expense              130,000

 Pre-tax income                         200,000

 Income tax expense                  70,000

Net income                                130,000  

Instructions:

Prepare the operating section of the statement of cash flows under the indirect method and the direct method.