Following Are the Income Statement and Some Additional Information for Parson

question 88

Essay

Following are the income statement and some additional information for Parson Corporation for 2009.
All sales were on credit and accounts receivable increased by $600 this year compared to last year. Merchandise purchases were on credit with an increase in accounts payable of $400 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash.
Required:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
Parson Corporation
Income Statement
For the Year Ended December 31, 2009
Net sales
Cost of goods sold
Gross margin
$\begin{array} { l r c } \text { Operating expenses } & \$ 2,000 & \\ \text { Depreciation expense } & 900 & ( 2,900 ) \\ \text { Income before taxes } & & 5,600 \\ \text { Income taxes } & & ( 1,600 ) \\ \text { Net income } & \$ 4,000 \end{array}$

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Definitions:

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