Stuart Brands, Inc. Stuart, presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Stuarts 2017 and 2016 year-end balance sheets:

Account Title	2017			2016
Accounts receivable	$	23,800		$	26,700
Merchandise inventory		59,700			51,200
Prepaid insurance		19,000			26,700
Accounts payable		26,100			16,400
Salaries payable		4,950			4,150
Unearned service revenue		750			3,000

The 2017 income statement is shown below:

Income Statement
Sales	$	622,000
Cost of goods sold		(371,000	)
Gross margin		251,000
Service revenue		5,200
Insurance expense		(39,000	)
Salaries expense		(144,000	)
Depreciation expense		(5,800	)
Operating income		67,400
Gain on sale of equipment		3,100
Net income	$	70,500

Required

1. Prepare the operating activities section of the statement of cash flows using the direct method.

2. Prepare the operating activities section of the statement of cash flows using the indirect method.