Question

The income statement of Kodiak Industries Inc. for the currentyear ended June 30 is as follows:

Sales

 

 

$465,560

Cost of merchandisesold

 

 

264,350

Gross profit

 

 

$201,210

Operatingexpenses:

 

 

 

 

Depreciationexpense

$35,730

 

 

 

Other operatingexpenses

94,450

 

 

 

 

Total operating expenses

 

 

130,180

Income before incometax

 

 

$71,030

Income tax expense

 

 

19,700

Net income

 

 

$51,330

           

Changes in the balances of selected accounts from the beginningto the end of the current year are as follows:

 

Increase/Decrease*

Accounts receivable (net)

$10,320*

 

Inventories

3,590

 

Prepaid expenses

3,440*

 

Accounts payable (merchandisecreditors)

7,340*

 

Accrued expenses payable (operatingexpenses)

1,030

 

Income tax payable

2,460*