E23-4 (Preparation of Operating Activities Section-Direct Method) The income statement of Rodriquez Company is shown below. RODRIQUEZ COMPANY Income Statement For the Year Ended December 31, 2010 Sales $6,900,000 Cost of goods sold Beginning inventory 1,900,000 Purchases 4,400,000 Goods available for sale 6,300,000 Ending inventory 1,600,000 Cost of goods sold 4,700,000 Gross profit 2,200,000 Operating expenses Selling expenses 450,000 Administrative expenses 700,000 1,150,000 Net income $1,050,000 Additional information: Accounts receivable decreased $310,000 during the year. Prepaid expenses increased $170,000 during the year. Accounts payable to suppliers of merchandise decreased $275,000 during the year. Accrued expenses payable decreased $120,000 during the year. Administrative expenses include depreciation expense of $60,000.
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