The following accounts and corresponding balances were drawn from Crimson Sports, Inc.€™s 2014 and 2013 year-end balance sheets:

The 2014 income statement is shown below:
Income Statement
Sales .............. $495,000
Cost of goods sold ....... (215,000)
Gross margin .......... 280,000
Service revenue ........... 20,000
Insurance expense ........ (42,000)
Salaries expense ......... (122,000)
Depreciation expense ........ (12,000)
Operating income ......... 124,000
Gain on sale of equipment ...... 1,500
Net income ........... $125,500

Required
a. Prepare the operating activities section of the statement of cash flows using the direct method.
b. Prepare the operating activities section of the statement of cash flows using the indirectmethod.

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Account Title 2014 2013 Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries payable Unearned service revenue S31,000 70,000 25,000 18,000 5,100 10,200 S36,000 65,000 24,000 20,000 4,500 9,500