Statement of cash flow: Direct method
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The income statement of Trahan Company is shown below:
TRAHAN COMPANY
Income Statement
For the Year Ended December 31, 2003
Sales $6,000,000
Cost of goods sold 4,200,000
Gross profit 1,800,000
Operating expenses
Selling expenses $400,000
Administrative expense 700,000
Depreciation expense 90,000
Amortization expense 30,000 1,220,000
Net income $ 580,000
Additional information:
1. Accounts receivable increased $400,000 during the year.
2. Inventory increased $200,000 during the year.
3. Prepaid expenses increased $200,000 during the year.
4. Accounts payable to merchandise suppliers increased $100,000 during
the year.
5. Accrued expenses payable increased $180,000 during the year.
Using Excel, prepare the operating activities section of the statement of cash flows for the year ended December 31, 2003, for Trahan Company, using the direct method.
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Solution Summary
Prepares the operating activities section of the statement of cash flows.
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