10 20 points References Problem 14-14A (Algo) The direct versus the indirect method of determining cash flow from operating activities LO 14-1, 14-2 Vernon Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Vernon's Year 2 and Year 1 year-end balance sheets: Year 1 $29,900 Account Title Year 2 Accounts receivable $23,700 Merchandise inventory 58,500 51,200 Prepaid insurance 19,000 27,000 Accounts payable 26,700 18,600 Salaries payable 4,950 4,100 Unearned service revenue 1,000, 2,950 The Year 2 income statement is shown below: Income Statement Sales $ 613,000 Cost of goods sold Cross margin Service revenue Insurance expense (382,000) 231,000 4.600 (39,000) (158,000) Salaries expense Depreciation expense Operating income Gain on sale of equipment Het income Required (5,700) 32,900 4,700 $ 37,600 a. Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method. 10 20 points References Required a. Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows should be indicated with minus sign.) VERNON BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Cash collections from customers for sales i Cash collections from customers for services Cash payments for Net cash flow from operating activities Required A Required B> Required A Required B 10 points References Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) VERNON BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Add: Deduct Add: noncash expenses Net cash flow from operating activities