6. (TCO F) Cash flows from operating activities (indirect and direct methods).

6. (TCO F) Cash flows from operating activities (indirect and direct methods).
Presented below is the income statement of Smiling Tiger Inc.

Sales

$1020000

Cost of goods sold

640000

Gross profit

$380000

Operating expenses

230000

Income before income taxes

150000

Income taxes

60000

Net income

$90000

In addition the following information related to net changes in working capital is presented.

Debit

Credit

Cash

$50000

Accounts receivable

34500

Inventories

$25000

Salaries payable (operating expenses)

60000

Accounts payable

450000

Income taxes payable

12000

Depreciation expense for the year was $54000

Deferred tax liability account increased $6500

Required:

Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:

(a)

using the indirect method.

(b)

using the direct method.