The 2020 comparative balance sheet and income statement of Shock Electricity Inc. follow:

Shock Electricity had no non-cash investing and financing transactions during 2020. During the year, there were no sales of land or plant and equipment, no issuances of notes payable, and no repurchase of common shares.

Required

1. Prepare the operating section of the 2020 cash flow statement, formatting by the direct method.

2. How would this look different if the indirect method were used for Requirement 1?

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SHOCK ELECTRICITY INC. Balance Sheet August 31, 2020 and 2019 Assets 2020 2019 Current assets Cash and cash equivalents $ 47,000 $ 156,000 Accounts receivable 415,000 431,000 Interest receivable 6,000 9,000 Inventory 993,000 899,000 Prepaid expenses 17,000 22,000 Electrical equipment, net 1,009,000 937,000 Land 401,000 200,000 Total assets $2,888,000 $2,654,000 Liabilities Current liabilities Accounts payable $ 114,000 $ 179,000 Interest payable Salaries payable 63,000 67,000 71,000 14,000 Lease liabilities 181,000 187,000 Income tax payable 73,000 38,000 Long-term liabilities Notes payable 450,000 650,000 Shareholders' equity Common shares 1,411,000 1,223,000 Retained earnings 525,000 296,000 Total liabilities and shareholders' equity $2,888,000 $2,654,000