1. Operatingactivities:DirectandindirectmethodsThe20X5incomestatementofOfficeProductsInc.follows:OFFICEPRODUCTSINC. IncomeStatement fortheYearEndedDecember31,20X5 Netsales $980,000 Costofgoodssold Beginninginventory $235,000 Netpurchases 720,000 Goodsavailableforsale $955,000 Less:Endinginventory 260,000 Costofgoodssold 695,000 Grossprofit $285,000 Expenses Selling&administrative $149,000 Depreciation 54,000 203,000 $82,000 Otherrevenue(expense) Interestexpense $(18,000) Gainonsaleofequipment 26,000 8,000 Incomebeforeincometaxes $90,000 Incometaxes 27,000 Netincome $63,000 Thefollowingadditionalinformationwasobtainedfromthegeneralledgerandmanagementpersonnel:
   1. Accountspayablerelatedtothepurchasesofmerchandisedecreasedduring20X5by$35,800.Incontrast,accountsreceivableincreasedby$25,425.
   2. Prepaidexpensesandwagespayableincreasedthroughout20X5by$4,145and$7,325,respectively.
   3. ThebalanceintheincometaxespayableaccountonJanuary1was$6,625;theDecember31balancewas$4,100.
   4. Thecompanyfinanceda$78,000equipmentpurchasebysigninganotepayablethatisduein20X8.
   Instructions
   1. Preparetheoperatingactivitiessectionofthestatementofcashflowsbyusingthedirectmethod.
   2. Preparetheoperatingactivitiessectionofthestatementofcashflowsbyusingtheindirectmethod.

	YOUR ANSWERS
Direct Method
Cash collected
Less cash paid for:
Inventory
Selling & administrative
Interest expense
Income taxes
Net cash provided by operating activities
Indirect Method
Net income
Accounts payable decreased
Accounts receivable increased
Prepaid expenses increased
wages payable increased
Inventory
Income taxes payable decreased
Depreciation
Gain on sale of equipment
Net cash provided by operating activities