Bannack Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2010. An income statement for the year and comparative balance sheets are as follows:

Dividends of $5,000 were declared and paid during the year. New plant assets were purchased during the year for $125,000 in cash. Also, land was sold for cash at its book value. Plant assets were sold during the year for $20,000 in cash. The original cost of the assets sold was $50,000, and their book value was $30,000. A portion of the bank loan was repaid.
Required
1. Prepare a statement of cash flows for 2010 using the direct 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 isused.

For the Year Ended June 30, 2010 5400,000 Sales revenue Cost of goods sold Gross profit General and administrative expenses Depreciation expense Loss on sale of plant assets S 40,000 90,000 Total expenses and losses Income before interest and taxes Interest expense S 30,000 Income before taxes 15,000 5,000 10,000 Income tax expense Net income June 30 2010 S 25,000 80,000 75,000 2009 Cash Accounts receivable Inventory Prepaid rent 40,000 69,000 50,000 18,000 177000 150,000 500,000 Total current assets Land Plant and equipment Accumulated depreciation S 60,000 575,000 Total long-term assets S 325,000 S 507,000 S 145,000 50,000 5,000 $ 200,000 S 75,000 S 100,000 132,000 S 232,000 507000 $ 400,000 577000 S140,000 45,000 15,000 S 200,000 $150,000 100,000 127000 S 227000 577000 Total assets Accounts payable Other accrued liabilities Income taxes payable Total current liabilities Long-term bank loan payable Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity