fSaemenofCashFlowsBusiness公司金融會計

LearningObjectivesPowerNotes1. PurposeoftheStatementofCashFlows2. ReportingCashFlows3. StatementofCashFlows–TheIndirectMethod4. StatementofCashFlows–TheDirectMethod5. FinancialAnalysisandInterpretationChapterF14C14StatementofCashFlowsCashFlowBasicsStatementofCashFlows–TwoMethodsChangesinCurrentAccountsStatementofCashFlows–IndirectMethodStatementofCashFlows–DirectMethodFreeCashFlowSlide# PowerNoteTopics 3 20 31 34 39 62Note:Toselectatopic,typetheslide#andpressEnter.PowerNotesChapterF14StatementofCashFlowsReportingCashFlows1. Operatingactivities–transactionsthataffectnetincome.2. Investingactivities–transactionsthataffectnoncurrentassets.3. Financingactivities–transactionsthataffectequityanddebtoftheentity.Thestatementofcashflows

reportsafirm’smajorcashinflowsandoutflowsforaperiod.Cashflowsarereportedbythreetypesofactivities.CashFlowsIncreasesinCashDecreasesinCashCashCashFlowsIncreasesinCash(receiptsfromrevenues)DecreasesinCashOperatingCashCashFlowsIncreasesinCash(receiptsfromrevenues)(paymentsforexpenses)DecreasesinCashOperatingOperatingCashCashFlowsIncreasesinCash(receiptsfromrevenues)(paymentsforexpenses)(receiptsfromsalesofnoncurrentassets)DecreasesinCashOperatingInvestingOperatingCashCashFlowsIncreasesinCash(receiptsfromrevenues)(paymentsforexpenses)(receiptsfromsalesofnoncurrentassets)(paymentsforaquiringnoncurrentassets)DecreasesinCashOperatingInvestingOperatingInvestingCashCashFlowsIncreasesinCash(receiptsfromrevenues)(paymentsforexpenses)(receiptsfromsalesofnoncurrentassets)(receiptsfromissuingequityanddebtsecurities)(paymentsforaquiringnoncurrentassets)DecreasesinCashOperatingInvestingFinancingOperatingInvestingCashCashFlowsIncreasesinCash(receiptsfromrevenues)(paymentsfordividends,andredemptionofdebtsecurities)(paymentsforexpenses)(receiptsfromsalesofnoncurrentassets)(receiptsfromissuingequityanddebtsecurities)(paymentsforaquiringnoncurrentassets)DecreasesinCashOperatingInvestingFinancingOperatingInvestingFinancingCashCashFlows––OperatingActivitiesTypicalcashinflowsTypicalcashoutflowsWhataresomeofthetypicalcashinflowsfromoperatingactivities?CashFlows––OperatingActivitiesTypicalcashinflowsTypicalcashoutflowsInterestRevenueSalesofgoodsandservicesDividendRevenueWhataresomeofthetypicalcashoutflowsfromoperatingactivities?CashFlows––OperatingActivitiesTypicalcashinflowsTypicalcashoutflowsSalesofgoodsandservicesMerchandisepurchasesPaymentsofwages&otherexpensesTaxpaymentsInterestRevenueDividendRevenueCashFlows––InvestingActivitiesTypicalcashinflowsTypicalcashoutflowsWhataresomeofthetypicalcashinflowsfrominvestingactivities?CashFlows––InvestingActivitiesTypicalcashinflowsTypicalcashoutflowsSalesoffixedassetsandotherlong-terminvestmentsSaleofmarketablesecuritiesandinvestmentsWhataresomeofthetypicalcashoutflowsfrominvestingactivities?CashFlows––InvestingActivitiesTypicalcashinflowsTypicalcashoutflowsSalesoffixedassetsandotherlong-terminvestmentsSaleofmarketablesecuritiesandinvestmentsPurchaseoffixedassetsandotherlong-terminvestmentsPurchaseofmarketablesecuritiesandinvestmentsCashFlows–FinancingActivitiesTypicalcashinflowsTypicalcashoutflowsWhataresomeofthetypicalcashinflowsfromfinancingactivities?CashFlows–FinancingActivitiesTypicalcashinflowsTypicalcashoutflowsSales(issuance)ofstockSale(issuance)ofbondsandothermoneymarketdebtBorrowingfrombanksandotherlendinginstitutionsWhataresomeofthetypicalcashoutflowsfromfinancingactivities?CashFlows–FinancingActivitiesTypicalcashinflowsTypicalcashoutflowsSales(issuance)ofstockSale(issuance)ofbondsandothermoneymarketdebtPurchaseoftreasurystockRepaymentandredemptionofdebt(bonds,notes,other)PaymentofcashdividendsBorrowingfrombanksandotherlendinginstitutionsStatementofCashFlows1. Generatecashflowfromoperations.2. Maintainandexpandoperatingcapacity.3. Paydividends.4. Paydebts,includinginterest,whendue.5. Generatefutureprofits.Theprimaryattentionistheflowofcashratherthannetincome.Thestatementofcashflowsisinvaluableinassessingthecapacityofafirmtoachievegoalssuchas:PreparingtheStatementofCashFlowsNetcashflowsfromoperatingactivitieswillbethedifferencebetweentheoperatingcashreceiptsandoperatingcashpayments.Netcashflowsfromoperatingactivitiesisdeterminedbyadjustingtheaccrualnetincomefromoperationstoreflectacash-basednetincomefromoperations.DirectMethodIndirectMethodAdvantagesofUsingtheDirectMethod1.Reportsthesourcesandusesofoperatingcashreceiptsandpayments.2.Iseasiertounderstandformanyinvestors.3.RecommendedbytheFinancialAccountingStandardsBoard(FASB).Note:Thetotalamountofnetcashflowfromoperatingactivitieswillbethesameforbothdirectandindirectmethods.InvestingandFinancingactivitiessectionswillbeidenticalforbothmethods.AdvantagesofUsingtheIndirectMethod1.Focusesonthedifferencesbetweennetincomeandnetcashflowfromoperations.2.Revealstherelationshipbetweentheincomestatement,thebalancesheet,andthestatementofcashflows.3.Lesscostlytoprepare.4.Mustbepreparedasasupplementalreportevenifthedirectmethodisused.5.98percentofcompaniessurveyedusetheindirectmethod.Cashflowsfromoperatingactivities:Cashflowsfrominvestingactivities:Cashflowsfromfinancingactivities:NetSolutions

StatementofCashFlows–DirectMethod

FortheMonthEndedNovember30,2002Cashreceivedfromcustomers $7,500Deductcashpaymentsforexpensesandpaymenttocreditors4,600Netcashflowfromoperatingactivities$2,900Cashpaymentsforacquiringland(10,000)Cashreceivedasowner’sinvestment$15,000Deductcashwithdrawalbyowner 2,000Netcashflowfromfinancingactivities13,000Netcashflowandendingcashbalance $5,900Cashflowsfromoperatingactivities:Cashflowsfrominvestingactivities:Cashflowsfromfinancingactivities:Netincome,perincomestatement$3,050Addincreaseinaccountspayable400Deductincreaseinsupplies(550)Netcashflowfromoperatingactivities$2,900Cashpaymentsforacquiringofland(10,000)Cashreceivedasowner’’sinvestment$15,000Deductcashwithdrawalbyowner2,000Netcashflowfromfinancingactivities13,000Netcashflowandendingcashbalance$5,900NetSolutionsStatementofCashFlows––IndirectMethodFortheMonthEndedNovember30,2002Cashflowsfromoperatingactivities:NetSolutionsStatementofCashFlows––DirectMethodFortheMonthEndedNovember30,2002Cashflowsfromoperatingactivities:NetSolutionsStatementofCashFlows––IndirectMethodFortheMonthEndedNovember30,2002Cashreceivedfromcustomers$7,500Deductcashpaymentsforexpensesandpaymenttocreditors4,600Netcashflowfromoperatingactivities$2,900Netincome,perincomestatement$3,050Addincreaseinaccountspayable400Deductincreaseinsupplies(550)Netcashflowfromoperatingactivities$2,900Cashflowsfromoperatingactivities:NetSolutionsStatementofCashFlows––DirectMethodFortheMonthEndedNovember30,2002Cashflowsfromoperatingactivities:NetSolutionsStatementofCashFlows––IndirectMethodFortheMonthEndedNovember30,2002Cashreceivedfromcustomers$7,500Deductcashpaymentsforexpensesandpaymenttocreditors4,600Netcashflowfromoperatingactivities$2,900Netincome,perincomestatement$3,050Addincreaseinaccountspayable400Deductincreaseinsupplies(550)Netcashflowfromoperatingactivities$2,900CashRelationshipsandCashFlowsCashLiabilitiesStockholders’’EquityBalanceSheetNoncashAssetsAssets=Liabilities+Stockholders’EquityCash+NoncashAssets=Liabilities+Stockholders’’EquityCash=Liabilities+Stockholders’’Equity––NoncashAssetsCashLiabilitiesStockholders’’EquityBalanceSheetNoncashAssetsAssets=Liabilities+Stockholders’EquityCash+NoncashAssets=Liabilities+Stockholders’EquityCash=Liabilities+Stockholders’Equity––NoncashAssetsCashRelationshipsandCashFlowsCashLiabilitiesStockholders’’EquityBalanceSheetNoncashAssetsThecashflowsaredeterminedbyanalyzingliabilities,stockholders’’equity,andnoncashassets.Assets=Liabilities+Stockholders’EquityCash+NoncashAssets=Liabilities+Stockholders’EquityCash=Liabilities+Stockholders’Equity––NoncashAssets123123CashRelationshipsandCashFlowsDeterminethedebitorcreditchangeofeachitemabove.ChangesinCurrentAccountsChangeAccounts20032002Debit CreditTradereceivables(net)$74,000 $65,000Inventories172,000 180,000Accountspayable(mdse.)43,500 46,700Accruedexpensespayable26,500 24,300Incometaxespayable7,9008,4009,0008,0003,2002,200500ChangesinCurrentAccountsChangeAccounts20032002Debit CreditTradereceivables(net) $74,000 $65,000Inventories 172,000180,000Accountspayable(mdse.)43,500 46,700Accruedexpensespayable26,500 24,300Incometaxespayable7,900 8,4009,0008,0003,2002,200500Thesedebitchangesaresubtractedfromnetincomeintheoperatingactivitiessectionofthestatementofcashflows.Thinkofthesedebitsasdeductionsfromnetincomeinarrivingatnetcashflowfromoperations.ChangesinCurrentAccountsChangeAccounts2003 2002Debit CreditTradereceivables(net) $74,000 $65,000Inventories 172,000180,000Accountspayable(mdse.)43,500 46,700Accruedexpensespayable26,500 24,300Incometaxespayable7,900 8,4009,0008,0003,2002,200500Thesecreditchangesareaddedtonetincomeintheoperatingactivitiessectionofthestatementofcashflows.Thinkofthesecreditsasadditionstonetincomeinarrivingatnetcashflowfromoperations.Cashflowsfromoperatingactivities:OperatingActivities––IndirectMethodStartwiththeaccrualbasisnetincomeshownontheincomestatement.Netincome,perincomestatement $108,000Depreciation $7,000Decreaseininventories 8,000Increaseinaccruedexpenses 2,20017,200$125,200Increaseinaccountsreceivables $9,000Decreaseinaccountspayable 3,200Decreaseinincometaxespayable 500Gainonsaleofland12,000 24,700Netcashflowfromoperatingactivities$100,500Deduct:Add:Cashflowsfromoperatingactivities:OperatingActivities––IndirectMethodBecausedepreciationexpensereducednetincomebutdidnotrequireanoutflowofcash,itisaddedbacktonetincome.Netincome,perincomestatement $108,000Depreciation $7,000Decreaseininventories 8,000Increaseinaccruedexpenses 2,20017,200$125,200Increaseinaccountsreceivables $9,000Decreaseinaccountspayable 3,200Decreaseinincometaxespayable500Gainonsaleofland12,00024,700Netcashflowfromoperatingactivities$100,500Deduct:Add:Cashflowsfromoperatingactivities:OperatingActivities––IndirectMethodTheserepresentcreditchangesinthecurrentaccounts.Thinkofthesecreditsasadditionalincomefromacashperspective.Whydotheserepresentanincreasedcashflow?Netincome,perincomestatement$108,000Depreciation$7,000Decreaseininventories8,000Increaseinaccruedexpenses2,200 17,200$125,200Increaseinaccountsreceivables$9,000Decreaseinaccountspayable3,200Decreaseinincometaxespayable500Gainonsaleofland12,00024,700Netcashflowfromoperatingactivities$100,500Deduct:Add:Cashflowsfromoperatingactivities:OperatingActivities––IndirectMethodTheserepresentdebitchangesinthecurrentaccounts.Thinkofthesedebitsasadditionalexpensefromacashperspective.Whydotheserepresentareducedcashflow?Netincome,perincomestatement$108,000Depreciation$7,000Decreaseininventories8,000Increaseinaccruedexpenses2,200 17,200$125,200Increaseinaccountsreceivables$9,000Decreaseinaccountspayable3,200Decreaseinincometaxespayable500Gainonsaleofland12,00024,700Netcashflowfromoperatingactivities$100,500Deduct:Add:Cashflowsfromoperatingactivities:OperatingActivities––IndirectMethodThisgainwasincludedinnetincomebutdidnotrepresentanoperatingcashflow.Therelatedcashinflowfromthesaleisreportedinthecashflowsfrominvestingactivitiessection.Netincome,perincomestatement$108,000Depreciation$7,000Decreaseininventories8,000Increaseinaccruedexpenses2,200 17,200$125,200Increaseinaccountsreceivables$9,000Decreaseinaccountspayable3,200Decreaseinincometaxespayable500Gainonsaleofland12,00024,700Netcashflowfromoperatingactivities$100,500Deduct:Add:Thesechangesincurrentaccountswereusedtopreparethestatementofcashflowswiththeindirectmethod.Theywillalsobeusedforthedirectmethodthatfollows.ChangesinCurrentAccountsChangeAccounts20032002DebitCreditTradereceivables(net)$74,000$65,000Inventories172,000180,000Accountspayable(mdse.)43,50046,700Accruedexpensespayable26,50024,300Incometaxespayable7,9008,4009,0008,0003,2002,200500RundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000Costofmerchandisesold790,000Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000Thisisanaccrualbasisincomestatement.Thedirectmethodofreportingcashflowswillessentiallyconvertthistoacashbasisstatement.RundellInc.

IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$960,000Costofmerchandisesold580,000Grossprofit $380,000Operatingexpenses:Depreciationexpense$18,000Otheroperatingexpenses260,000Totaloperatingexpenses278,000Incomefromoperations $102,000Otherincome:Gainonsaleofinvestments $30,000Otherexpense:Interestexpense 14,000 16,000Incomebeforeincometax$118,000Incometax27,500Netincome$90,500DebitCreditSales960,000Receivables 9,000CashChangesCashcollectedfromcustomersNote:Allincomestatementaccountbalancesarezeroatthebeginningofaperiod.Therefore,thebalanceshownrepresentstheamountofchangeduringtheperiod.RundellInc.

IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000Costofmerchandisesold790,000Grossprofit $390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations $187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditSales1,180,000Receivables 9,000Cash1,171,000ChangesCashcollectedfromcustomersNote:Thechangesinthecurrentbalancesheetaccountsaredeterminedbycomparingthebeginningandendingbalances.Receivablesincreasedby$9,000duringtheperiod.RundellInc.

IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000Grossprofit $390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations $187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditSales1,180,000Receivables 9,000Cash1,171,000ChangesCashcollectedfromcustomersTheincreaseinreceivablesrepresentsareductionincashinflowrelativetotheaccrualrevenuereportedontheincomestatement.RundellInc.

IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000Grossprofit $390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditCostofmdse.sold790,000Inventories8,000Accountspayable3,200CashChangesCashpaymentsformerchandiseRundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000785,200Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditCostofmdse.sold 790,000Inventories 8,000Accountspayable 3,200Cash785,200ChangesCashpaymentsformerchandiseRundellInc.

IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000 785,200Grossprofit $390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations $187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditCostofmdse.sold 790,000Inventories 8,000Accountspayable 3,200Cash785,200ChangesCashpaymentsformerchandiseAdecreaseininventories(creditchange)andandecreaseinaccountspayable(debitchange)havetheoppositeeffects.RundellInc.

IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000 (785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditDepr.expense7,000Accum.depreciation7,000ChangesDepreciationRundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditDepr.expense7,000Accum.depreciation7,000ChangesDepreciationThereisnocashflowfordepreciationexpense.RundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000ChangesDebitCreditOperatingexpenses196,000Accruedexpenses2,200CashChangesCashpaymentsforoperatingexpensesRundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000ChangesDebitCreditOperatingexpenses196,000Accruedexpenses2,200Cash193,800ChangesCashpaymentsforoperatingexpensesRundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,0000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditCash 72,000Investments60,000Gainonsaleofinvest.12,000ChangesGainonsaleofinvestmentsRundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,0000Otherexpense:Interestexpense 8,000 4,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditCash 72,000Investments60,000Gainonsaleofinvest.12,000ChangesGainonsaleofinvestmentsWhyisn’tthecashinflowof$72,000shownhere?RundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,0000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditCash72,000Investments60,000Gainonsaleofinvest.12,000ChangesGainonsaleofinvestmentsThecashinflowof$72,000willbeshownintheinvestingsectionofthestatementofcashflows.RundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,0000Otherexpense:Interestexpense8,0004,000Incomebeforeincometax$191,000Incometax83,000Netincome$108,000DebitCreditInterestexpense8,000CashChangesCashpaidforinterestexpenseRundellInc.IncomeStatementFortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000(785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,0000Otherexpense:Interestexpense8,0004,000(8,000)Incomebeforeincometax$191,000Incometax83,000Netincome$108,000Debit CreditInterestexpense8,000Cash8,000ChangesCashpaidforinterestexpenseThereisnointerestpayableaccountattheendoftheyear.RundellInc.IncomeStatement

FortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000 (785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,000 4,000(8,000)Incomebeforeincometax$191,000Incometax83,000Netincome$108,000Debit CreditIncometaxexpense 83,000Incometaxpayable 500CashChangesCashpaidforincometaxesRundellInc.IncomeStatement

FortheYearEndedDecember31,2003CashBasisSales$1,180,000$1,171,000Costofmerchandisesold790,000 (785,200)Grossprofit$390,000Operatingexpenses:Depreciationexpense$7,0000Otheroperatingexpenses196,000(193,800)Totaloperatingexpenses203,000Incomefromoperations$187,000Otherincome:Gainonsaleofland$12,000Otherexpense:Interestexpense8,000 4,000(8,000)Incomebeforeincometax$191,000Incometax83,000 (83,500)Netincome$108,000Debit CreditIncometaxexpense 83,000Incometaxpayable 500Cash83,500ChangesCashpai