Comparative balance sheet accounts of Marcus Inc. are presented below. MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2014 AND 2013 December 31

Debit Accounts 2014 2013 Cash $ 42,270 $ 33,810 Accounts Receivable 70,540 59,790 Merchandise Inventory 29,570 24,600 Investments (available-for-sale) 22,450 38,180 Machinery 30,470 18,860 Buildings 67,960 55,880 Land 7,600 7,600 Total $270,860 $238,720

Credit Accounts Allowance for Doubtful Accounts $ 2,440 $ 1,150 Accumulated DepreciationMachinery 5,960 2,090 Accumulated DepreciationBuildings 13,570 8,730 Accounts Payable 35,390 24,660 Accrued Payables 3,355 2,785 Long-Term Note Payable 21,440 30,520 Common Stock, no par 149,000 125,900 Retained Earnings 39,705 42,885 Totals $269,750 $238,750

Additional data (ignoring taxes): 1. Net income for the year was $40,720. 2. Cash dividends declared and paid during the year were $20,800. 3. A 20% stock dividend was declared during the year. $23,100 of retained earnings was capitalized. 4. Investments that cost $24,710 were sold during the year for $28,180. 5. Machinery that cost $3,900, on which $777 of depreciation had accumulated, was sold for $2,303.

Marcuss 2014 income statement follows (ignoring taxes). Sales $537,520 Less: Cost of goods sold 379,320 Gross margin 158,200 Less: Operating expenses (includes $8,625 depreciation and $5,400 bad debts) 120,130 Income from operations 38,070 Other: Gain on sale of investments $3,470 Loss on sale of machinery (820) 2,650 Net income $ 42,500

Instructions (a) Compute net cash flow from operating activities using the direct method. (b) Prepare a statement of cash flows using the indirect method.