Sunshine Enterprises included the following statement in its 2012 financial report:

Required(a) Convert each of the accrual-basis income statement accounts to a cash basis. Would you classify this method as directly or indirectly computing cash provided (used) by operating activities/(b) Prepare a proof of results. That is, begin with net income and adjust net income the arrive at cash provided (used) by operating activities. Would you classify this method as directly or indirectly computing cash provided used by operating activities?(c) Refer to figure, and use the same format to reconcile the income statement with operating cash flows.

INCOME STATEMENT 2012 S1,000,000 (250,000) (175,000) (100,000) (60,000) (120,000) S 295,000 Marketing revenue Salary expense Office supplies expense Depreciation expense Insurance expense Rent expense Net income BALANCE SHEET 2012 2011 S 120,000 105,000 Cash Accounts receivable S100,000 150,000 Office supply inventory Prepaid insurance Office furniture Less: Accumulated depreciation Total assets 75,000 50,000 500,000 (325,000) S550,000 S 20,000 100,000 125,000 305,000 85,000 10,000 465,000 S(225,000) S 560,000 Rent payable Common stock (S10 par value) Additional paid-in capital Retained earnings Total liabilities and shareholders' equity s,000 100,000 125,000 327,000 S 560,000 S550,000