Thornton Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Thornton's Year 2 and Year 1 year-end balance sheets: Account Title Year 2 Year 1 Accounts receivable $21,100 $29,800 Merchandise inventory 57,300 48,100 Prepaid insurance 18,500 26,900 Accounts payable 27,000 16,800 Salaries payable 4,950 4,050 Unearned service revenue 650 2,950 The Year 2 income statement is shown below. Income Statement Sales Cost of goods sold) Gross margin Service revenue Insurance expense Salaries expense Depreciation expense Operating income Gain on sale of equipment Net income Required $ 609,000 (375,000) 234,000 5,900 (40,000) (151,000) (4,300) 44,600 3,600 $ 48,200 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.