The following income statement and other data are for Kennesaw Auto Glass Specialists, Inc..

Kennesaw auto glass specialists, Inc.

Income Statement

For the year ended 2010 December 31

Sales		$450,000
Cost of goods sold		125,000
Gross margin		$325,000
Operating expenses (other than depreciation)	$60,000
Depreciation expense	20,000	80,000
Net income		$245,000

Changes in current assets (other than cash) and current liabilities during the year were:

	Increase	Decrease
Accounts receivable	$15,000
Merchandise inventory		$25,000
Prepaid insurance	8,000
Accounts payable		15,000
Accrued liabilities payable	4,000

Depreciation was the only noncash item affecting net income.

Prepare a working paper to calculate cash flows from operating activities under the direct method.

Prepare the cash flows from operating activities section of the statement of cash flows under the direct method.

Prepare the cash flows from operating activities section of the statement of cash flows under the indirect method.

Prove that the same cash flows amount is obtained under the indirect method by preparing the cash flows from operating activities section of the statement of cash flows under the indirect method. You need not prepare a working paper.