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:

Internal Support

Refers to the services and resources within an organization that assist its operations, such as IT support, human resources, and administrative assistance.

Direct Operating Expenses

Costs that can be directly tied to the production or delivery of a company's products or services, excluding overhead or administrative expenses.

Department Manager

A department manager is responsible for overseeing the daily operations, budget, and personnel of a specific department within a company.

Support Department Allocations

The method of distributing the costs of support departments to producing or other service departments that benefit from the activities of the support departments.