Glendive Corp. is in the process of preparing its statement of cash flows for the year ended June 30, 2014. An income statement for the year and comparative balance sheets are as follows:

                                                                                                For the Year Ended
                                                                                                    June 30, 2014
Sales revenue ...........................................................................$550,000
Cost of goods sold .....................................................................350,000
Gross profit ...............................................................................$200,000
General and administrative expenses ....................................$ 55,000
Depreciation expense ..................................................................75,000
Loss on sale of plant assets ..........................................................5,000
Total expenses and losses ......................................................$135,000
Income before interest and taxes ...........................................$ 65,000
Interest expense ...........................................................................15,000
Income before taxes .................................................................$ 50,000
Income tax expense .....................................................................17,000
Net income .................................................................................$ 33,000

Dividends of $7,000 were declared and paid during the year. New plant assets were purchased during the year for $195,000 in cash. Also, land was purchased for cash. Plant assets were sold during the year for $25,000 in cash. The original cost of the assets sold was $45,000, and their book value was $30,000. Additional stock was issued for cash, and a portion of the bank loan was repaid.

Required
1. Prepare a statement of cash flows for 2014 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 is used.

June 30 2014 2013 $ 31,000 $ 40,000 Cash Accounts receivable 90,000 75,000 Inventory Prepaid rent 80,000 95,000 12,000 16,000 $ 213,000 $ 250,000 750,000 $ 226,000 $ 170,000 600,000 Total current assets Land Plant and equipment Accumulated depreciation (310,000) (250,000) $ 690,000 $ 903,000 $ 155,000 $ 520,000 $ 746,000 $ 148,000 Total long-term assets Total assets Accounts payable Other accrued liabilities 32,000 26,000 Income taxes payable 8,000 $ 195,000 $ 100,000 $ 350,000 258,000 10,000 $ 184,000 $ 130,000 $ 200,000 Total current liabilities Long-term bank loan payable Common stock Retained earnings 232,000 $ 608,000 $ 903,000 $ 432,000 $ 746,000 Total stockholders' equity Total liabilities and stockholders' equity