Stuart Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Stuart's Year 2 and Year 1 year-end balance sheets: Account Title Year 2 Year 1 Accounts $21,300 $28,000 receivable Merchandise 57,400 50,600 inventory Prepaid 18,000 24,500 insurance Accounts payable 23,900 19,100 Salaries payable 4,750 4,150 Unearned service 750 2,800 revenue The Year 2 income statement is shown below: Income Statement Sales $ 610,000 Cost of goods sold (371,000) Gross margin 239,000 Service revenue 5,700 Insurance expense (39,000) Salaries expense (141,000) Depreciation (4,600) expense Operating income 60,100 Gain on sale of 3,100 equipment Net income $ 63,200 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.) STUART 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 Cash collections from customers for services Cash payments for: Inventory Insurance Salaries Net cash flow from operating activities Required A Required B 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 indirect method. (Amounts to be deducted should be indicated with a minus sign.) STUART BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Net income Add: Decrease in accounts receivable | Decrease in prepaid insurance Increase in accounts payable Increase in salaries payable Deduct: Increase in merchandise inventory Decrease in unearned service revenue Add: noncash expenses Depreciation expense Deduct: Gain on sale of equipment Net cash flow from operating activities (3,100) $ (3,100)