) What is the purpose of the statement of cash flows? What information does it provide?

(b) Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2018, for Vancare Company, using (1) the indirect method (2) the direct method.

Vancare Company Income Statement For the year ended December 31, 2018
Sales revenue		$6,900,000
Cost of goods sold
Beginning inventory	$1,900,000
Purchases	$4,400,000
Goods available for sale	$6,300,000
Ending inventory	$1,600,000
Cost of goods sold		$4,700,000
Gross Profit		$2,200,000
Operating expenses
Selling expense	$ 450,000
Administrative expense	$ 700,000	$1,150,000
Net Income		$1,050,000

Additional information:

1. Accounts receivable decreased $310,000 during the year.

2. Prepaid expenses increased $170,000 during the year.

3. Accounts payable to suppliers of merchandise decreased $275,000 during the year.

4. Accrued expenses payable decreased $120,000 during the year.

5. Administrative expenses include depreciation expense of $60,000.