Avatar Company Uses the Indirect Method to Prepare the Statement $\quad$

question 88

Essay

Avatar Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Avatar Company
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Income Statement
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Year Ended December 31, 2015
$\begin{array} { l r r } \text { Sales Revenue } & \$ 360,000 & \\ \text { Interest Revenue } & 1,500 & \\ \text { Gain on Sale of Plant Assets } & \underline { 6,000 } & \\ \text { Total Revenues and Gains } & & \$ 367,500 \\ \text { Cost of Goods Sold } & 165,000 & \\ \text { Salary Expense } & 67,500 & \\ \text { Depreciation Expense } & 18,000 & \\ \text { Other Operating Expenses } & 34,500 & \\ \text { Interest Expense } & 1,500 & \\ \text { Income Tax Expense } & \underline { 7,500 } & \\ \text { Total Expenses } & & \underline { 294,000 } \\ \text { Net Income/(loss) } & & \underline { \underline { \$ 73,500 } } \end{array}$
Additional information provided by the company includes the following:
Current assets other than cash increase by $36,000.
Current liabilities decrease by $1,500.
Prepare the operating activities section of the statement of cash flows.

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