Sunshine Enterprises included the following statements in its 2015 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 to 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 14–19, and use the same format to reconcile the income statement with operating cashflows.

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INCOME STATEMENT Marketing revenue Salary expense Office supplies expense Depreciation expense Insurance expense Rent expense Net income 2015 $1,000,000 (250,000) (175,000) (100,000) (60,000) (120,000) $ 295,000 BALANCE SHEET Cash Accounts receivable Office supply inventory Prepaid insurance Office furniture Less: Accumulated depreciation 2015 2014 100,000 150,000 $ 120,000 105,000 85,000 10,000 465,000 (325,000) $(225,000) $560,000 $ 8,000 100,000 125,000 327,000 560,000 75,000 50,000 500,000 Total assets Rent payable Common stock ($10 par value) Additional paid-in capital Retained earnings $550,000 $ 20,000 100,000 125,000 305,000 $550,000 Total liabilities and shareholders' equity