A consolidated income statement and selected comparative consolidated balance sheet data for Palano Company and subsidiary follow:

Required:
Prepare the cash flow from operating activities section of a consolidated statement of cash flows assuming use of the:
A. Direct method.
B. Indirectmethod.

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Palano Company and Subsidiary Consolidated Income Statement for the Year Ended December 31, 2010 Sales Cost of sales Gross profit Operating expenses $701,000 263,000 438,000 Depreciation expense Selling expenses Administrative expenses 76,000 122,000 85,000 Consolidated net income Less noncontrolling interest in consolidated net income Controlling interest in consolidated net income 283,000 155,000 38,750 $116,250 December 31 2009 2010 $229,000 Accounts receivable Inventory Prepaid selling expenses Accounts payable Accrued selling expenses Accrued administrative expenses 194,000 26,000 99,000 96,000 56,000 318,000 234,000 30,000 79,000 84,000 39,000