Melvin Company's income statement for the year ended December 31, 2012, contained the following condensed information.
Revenue from fees $830,220
Operating expenses (excl. depreciation) $625,300
Depreciation expense 62,250
Loss on sale of equipment 28,130
Income before taxes 114,540
Income tax expense 39,140
Net income $75,400
Accounts receivable $36,330 $58,320
Accounts payable 46,020 30,620
Income taxes payable 4,500 8,070
(Accounts payable pertains to operating expenses.)
Prepare the operating activities section of the statement of cash flows using the direct method.
The operating activities section under the direct method will look like this:
Cash flows from operating activities
Cash receipts from customers (830220 - 21990 (difference in A/R) 808,230
Cash payments, for ...
The solution provides the correct presentation of the operating activities section of the statement of cash flows using the direct method for Melvin Company.