Following is an income statement for Claims Corporation for the year ended December 31, 2011, and a schedule listing the company’s current assets and current liabilities at the end of 2010 and 2011.

Required
a. Prepare a schedule documenting Claims Corporation’s net cash flow from operating activities for the year ended December 31, 2011, using the indirect method.
b. Prepare a schedule documenting Claims Corporation’s net cash flow from operating activities for the year ended December 31, 2011, using the direct method. Assume that selling and general expenses are related to both prepaid expenses and accruedliabilities.

Transcribed Image Text:

Claims Corporation Income Statement For the Year Ended December 31, 2011 Sales Cost of goods sold Gross margin Operating expenses $80,700 (46,200) 34,500 Selling and general expenses 9,200 2,000 (11,200) 23,300 5,700 29,000 (11,600) $17400 2011 4,300 10,200 11,800 Depreciation expense Operating income Gain on sale of land held as investment Income before income t Income tax expense ax Net income 2010 Cash Accounts receivable Inventory Prepaid selling/general expenses Accounts payable Accrued liabilities $12,200 4,700 7,000 3,600 3,000 1,670 850 5,800 2,900