Cash flows from operating activities (indirect and direct methods). Presented below is the income statement of Smiling Tiger, Inc.

Sales ................ $525,000

Cost of goods sold ......... $260,000

Gross profit .............. $265,000

Operating expenses ........... $106,000

Income before income taxes ...... $159,000

Income taxes ............ $ 63,600

Net income ............ $ 95,400

In addition, the following information related to net changes in working capital is presented.

Depreciation expense for the year was $23,000

Deferred tax liability account increased $3,400

Required:

Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:

(a) Using the indirect method.

(b) Using the direct method.

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Credit Debit S 10,000 S 15,000 Cash Accounts receivable Inventories Salaries payable (operating expens 15,000 Accounts payable Income taxes payable S 36,000 S 23,000 S 5,000