The statement of profit or loss of Okamoto Motors Ltd is presented here.

Additional information:

1. Accounts receivable decreased $127 500 during the year.

2. Prepaid expenses increased $42 500 during the year.

3. Accounts payable to merchandise suppliers increased $12 500 during the year.

4. Accrued expenses payable increased $41 250 during the year.

Required

(a) Prepare the operating activities section of the statement of cash flows for the year ended 31 December 2015 using the direct method.

(b) Prepare the operating activities section of the statement of cash flows for the year ended 31 December 2015, using the indirect method.

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Sales Cost of sales Beginning inventory Purchases Goods available for sale Ending inventory Total cost of sales Gross profit Operating expenses Selling expenses OKAMOTO MOTORS LTD Statement of profit or loss for the year ended 31 December 2015 Administrative expense Depreciation expense Amortisation expense Profit $ 445 000 857 500 1302 500 480 000 100 000 131 250 31 250 5.000 $1350 000 822 500 527 500 267 500 $ 260 000