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Asquith Direct method

Price: $2.00


The income statement of Asquith Company is presented below

Additional information:
1. Accounts receivable decreased $230,000 during the year, and inventory increased
$120,000.
2. Prepaid expenses increased $125,000 during the year
3. Accounts payable to merchandise suppliers increased $50,000 during the year.
4. Accrued expenses payable increased $155,000 during the year.
Asquith Company
Income Statement
For the Year Ended December 31, 2014
Sales revenue  5,250,000
Cost of goods sold
   Beginning inventory 1,780,000
   Purchases 3,430,000
   Goods available for sale 5,210,000
   Ending inventory 1,900,000
Total cost of goods sold 3,310,000
Gross profit 1,940,000
Operating expenses
   Depreciation expense 95,000
   Amortization expense 20,000
   Other expenses 945,000 1,060,000
Net income 880,000


Instructions
Prepare the operating activities section of the statement of cash flows using the direct
method.

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