Statement of Cash Flows—Indirect Method Refer to all of the facts in Problem 12-11.

Required

1. Prepare a statement of cash flows for 2010 using the indirect method in the Operating Activities section.

2. Evaluate the following statement: Whether a company uses the direct or indirect method to report cash flows from operations is irrelevant because the amount of cash flow from operating activities is the same regardless of which method is used.

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For the Year Ended June 30, 2010 $550,000 Sales revenue Cost of goods sold Gross profit 350,000 $200,000 $ 55,000 General and administrative expenses 75,000 Depreciation expense Loss on sale of plant assets Total expenses and losses 5,000 $135,000 $ 65,000 15,000 Income before interest and taxes Interest expense $ 50,000 17,000 $ 33,000 Income before taxes Income tax expense Net income