Freeport Corporation's Income Statement for Last Year Appears Below:

question 23

Essay

Freeport Corporation's income statement for last year appears below:
The beginning and ending balances for last year are available for the following selected accounts (the company did not dispose of any property,plant,and equipment during the year):
$\begin{array}{lrr}&\text { Ending } & \text { Beginning } \\&\text { Balance } & \text { Balance } \\\text {Accounts receivable }&\$ 32,000 & \$ 40,000 \\\text {Inventory. }&\$ 60,000 & \$ 50,000 \\\text { Prepaid expenses}&\$ 12,000 & \$ 8,000 \\\text {Accumulated depreciation }&\$ 40,000 & \$ 30,000 \\\text { Accounts payable}&\$ 30,000 & \$ 45,000 \\\text { Accrued liabilities.}&\$ 16,000 & \$ 10,000 \\\text {Income taxes pavable }&\$ 2,000 & \$ 5,000\end{array}$ Required:
Using the direct method,prepare in good form the operating activities section of the statement of cash flows.

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Definitions:

Prototype

An original model or preliminary version from which other forms are developed or copied.

Normative

Relating to principles or rules of what is considered right and wrong, often used in economics to express subjective or value-based judgments.

Other Things Equal

A principle in economic models known as ceteris paribus, which means holding all other variables constant to isolate the effect of one variable.

Variables

Elements, factors, or quantities that can change or have different values in a given situation or analysis.