Question

The income statement for Rhino Company for the current year ended June 30 and balances of selected accounts at the beginning and the end of the year are as follows:

1	Sales		$450,000.00
2	Cost of goods sold		151,700.00
3	Gross profit		$298,300.00
4	Operating expenses:
5	Depreciation expense	$37,780.00
6	Other operating expenses	115,450.00
7	Total operating expenses		153,230.00
8	Income before income tax		$145,070.00
9	Income tax expense		39,310.00
10	Net income		$105,760.00

	End	Beginning
	of Year	of Year
Accounts receivable (net)	$36,230	$31,850
Inventories	93,760	81,240
Prepaid expenses	14,670	15,660
Accounts payable (merchandise creditors)	67,950	63,470
Accrued expenses payable (operating expenses)	19,130	20,560
Income tax payable	4,390	4,390

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow, if required.

1. Cash flows from operating activities:          

2. Cash received from customers      

3   Cash payments for merchandise             

4   Cash payments for operating expenses         

5   Cash payments for income taxes             

6   Net cash flow from operating activities

Answer 1

Cash flows from operating activities:
Cash received from customers ($450,000+$31,850-$36,230)	$   445,620
Cash payments for merchandise ($151,700+$93,760-$81,240+$63,470-$67,950)	$ (159,740)
Cash payments for operating expenses ($115,450+$20,560-$19,130+$14,670-$15,660)	$ (115,890)
Cash payments for income taxes ($39,310+$4,390-$4,390)	$   (39,310)
Net cash flow from operating activities	$   130,680

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