Following is an income statement for the Clayton Corporation for the year ended December 31, 2020, and a schedule listing the company’s current assets and current liabilities at the end of 2019 and 2020. 

Required 

a. Prepare a schedule documenting the Clayton Corporation’s net cash flow from operating activities for the year ended December 31, 2020, using the indirect method. 

b. Prepare a schedule documenting the Clayton Corporation’s net cash flow from operating activities for the year ended December 31, 2020, using the direct method. Assume that selling and general expenses are related to both prepaid expenses and accrued liabilities.

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Clayton Corporation Income Statement For the Year Ended December 31, 2020 Sales $80,700 Cost of goods sold (46,200) Gross margin Operating expenses: Selling and general expenses Depreciation expense Operating income 34,500 $ 9,200 2,000 (11,200) 23,300 Gain on sale of land held as investment 5,700 Income before income tax 29,000 Income tax expense (5,800) Net income $23,200 2019 2020 Cash $12,200 $ 4,300 Accounts receivable 4,700 10,200 Inventory Prepaid selling/general expenses Accounts payable 7,000 11,800 3,600 850 3,000 5,800 Accrued liabilities 1,670 2,900