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Problem 21-10 Relationship between the income statement and cash flows from operating activities (direct method and indirect method) [LO21-3, 21-4] The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods. Some elements necessary to complete the schedule are missing Required: Complete the schedule by determining each of the following missing elements: (Amounts to be deducted should be indicated with a minus sign.) Cash flows from Operating Activities Indirect Method Income Statement Direct Method Net income Adjustments $421 Decrease in accounts receivable 35 Gain on sale of equipment Increase in inventory 17 Cash received from customers (35) (Not reported-no cash effect) (23) Sales Gain on sale of equipmen Cost of goods sold Salaries expense Depreciation expense Interest expense Insurance expense Loss on sale of land Income tax expense Net Income Increase in accounts payable 29 Cash paid to suppliers 17 Cash paid to employees 20 (Not reported-no cash effect) (64) (20) Depreciation expense Decrease in bond discount 7 Cash paid for interest 20 Cash paid for insurance 17 (Not reported-no cash effect) (43) Decrease in prepaid insurance (17) Loss on sale of land (49) Increase in income tax payable Cash paid for income taxes $ 131 Net cash flows from operating activities Net cash flows from operating activities Direct Method Cash received from customers (Not reported-no cash effect) (185) (47) Cash paid to suppliers Cash paid to employees (Not reported-no cash effect) Cash paid for interest Cash paid for insurance (Not reported-no cash effect) Cash paid for income taxes Net cash flows from operating activities (20) (32) 131

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