Vernon Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Vernon's Year 2 and Year 1 year-end balance sheets:

Account TitleYear 2Year 1Accounts

receivable$22,300$28,600

Merchandise inventory57,50048,100

Prepaid insurance18,50025,700

Accounts payable25,10019,600

Salaries payable4,8004,000

Unearned service revenue1,0002,900

The Year 2 income statement is shown below:

Income Statement

Sales$607,000

Cost of goods sold(369,000)

Gross margin238,000

Service revenue4,900

Insurance expense(40,000)

Salaries expense(152,000)

Depreciation expense(4,400)

Operating income46,500

Gain on sale of equipment3,800

Net income$50,300

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

Complete this question by entering your answers in the tabs below. RequiredA E Required B Prepare the operating activities section of the statement of cash ows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities: Add: Add: noncash expenses Net cash flow from operating activities Complete this question by entering your answers in the tabs below. RequiredA Required B Prepare the operating activities section of the statement of cash ows using the direct method. (Cash outflows should be indicated with minus sign.) Cash flows from operating activities: Cash collections from customers for sales Cash collections from customers for services Cash payments for: Net cash ow from operating activities Required B >