Use the following income statement and information about changes in non-cash current assets and current liabilities to prepare only the cash flows from operating activities section of the statement of cash flows using:

(a). Indirect Method (5 points) (b). Direct Method (5 points)

Scotch Company Income Statement For the Year Ended December 31, 2016

Sales 1,700,000

Cost of Goods Sold 950,000

Gross Profit 750,000

Operating Expenses Salaries Expense 220,000

Depreciation Expense 40,000

Rent Expense 50,000

Amortization Expense 6,000

Utilities Expense 15,000

Total Operating Expenses 331,000

Net Income from Operations 419,000

Gain on sale of equipment 8,000

Net Income 427,000

Changes in current asset and current liability accounts for the year that relates to operations follow: Accounts Receivable 20,000

Increase Merchandise Inventory 30,000

Increase Accounts Payable 12,000

Decrease Salaries Payable 5,000 Decrease