The income statement of Kodiak Industries Inc. for the current year ended June 3

Question

The income statement of Kodiak Industries Inc. for the current year ended June 30 is as follows:

Changes in the balances of selected accounts from the beginning to the end of the current year are as follows:

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Use the minus sign to indicate cash out flows, cash payments, and decreases in cash.

Sales $491,140 Cost of merchandise sold 278,870 Gross profit $212,270 Operating expenses: Depreciation expense $37,690 Other operating expenses 99,640 Total operating expenses 137,330 Income before income tax $74,940 Income tax expense 20,790 Net income $54,150

Explanation / Answer

Cash Flow

Kodiak Industries

June 30

Particulars Amount Sign Remarks Payment received from debtors 10880 + Payment made to creditors 7740 - Payment made towards Income Tax 2600 - Inventories increase 0 As it has increased on assumption that all inventory is purchased on account Prepaid expenses 0 As expenses must have been charged to Profit and Loss account Accured expenses payable 0 As no cash movement was there Cash Inflow from Operating Activities 540

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