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Based on the class text book- Principles of Managerial Finance by Gitman & Zutter - Chapter...

Based on the class text book- Principles of Managerial Finance by Gitman & Zutter - Chapter 4-Cash Flow and Financial Planning other additional readings, Solve the following problem on Cash Flow Statement.

The income statement and a partial balance sheet for Jefferson Company is presented below.

                          Jefferson Company

                            Income Statement

                     For the Year Ended December 31, 2014

Sales                                                        $500,000

Cost of goods sold                                        390,000

Gross profit $                                                                110,000

Operating expenses:

Salaries$                                                    70,000

Depreciation expense                                   20,000

Miscellaneous                                             10,000          100,000

                         Net income                                         $10,000

                                                                                   ======

________________________________________________________

                        Jefferson Company

                        Partial Balance Sheet

                         December 31, 2014

                                          12/31/2014               12/31/2013

Cash                                                      $80,000                          $65,000

Accounts receivable (net)                           57,000                            50,000

Inventories                                          102,000                                86,000

Prepaid expenses                                     4,500                                  4,000

Accounts payable (merchandise)              58,000                                51,000

Salaries payable                                       7,500                                6,000

Required: Prepare the operating activities section of the statement of cash flows using the direct method.

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