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Income statement ignoring income tax ramifications

Last year, SOS a service company had sales of $820,000
and collected $700,000 cash from its sales; its customers still owed SOS $120,000 at the end of the year. Total Operating Expenses for the year were $620,000 including $90,000 of Depreciation Expense. All expenses, except depreciation was paid in cash.

Please ignore the income tax ramifications.

a) Prepare an Income Statement
b) Prepare a Statement of Cash Provided by Operating
Activities using the Direct Method.

Solution Preview

Income Statement
<br>Sales $820,000
<br>Less Expenses ($620,000)
<br> ---------
<br> ...