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JWCL543_ch23_01-08.qxd 6/4/11 8:38 AM Page 1 B EXERCISES 2 E23-1B (Classification of Transactions) Aqua Pools Inc. had the following activity in its...

E23-3B (Preparation of Operating Activities Section—Indirect Method, Periodic Inventory) The income

statement of Guesser Company is shown below.

GUESSER COMPANY

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2012

Sales $755,000

Cost of goods sold 543,000

Gross profit 212,000

Operating expenses

Selling expenses $52,000

Administrative expenses 89,000 141,000

Net income $ 71,000

Additional information:

1. Accounts receivable decreased $63,000 during the year.

2. Inventory increased $38,000 during the year.

3. Prepaid expenses increased $12,000 during the year.

4. Accounts payable to increased $25,000 during the year.

5. Accrued expenses payable increased $6,000 during the year.

6. Administrative expenses include depreciation expense of $20,000.

E23-4B (Preparation of Operating Activities Section—Direct Method) Data for Guesser Company arepresented in E23-3B. 

InstructionsPrepare the operating activities section of the statement of cash flows using the direct method.

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