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. Indirect method.

Transcribed Image Text:

Palano Company and Subsidiary Consolidated Income Statement for the Year Ended December 31, 2020 $701,000 Sales Cost of sales 263,000 Gross profit Operating expenses: Depreciation expense Selling expenses Administrative expenses 438,000 $76,000 122,000 85,000 283,000 155,000 38,750 $116,250 Consolidated net income Less noncontrolling interest in consolidated net income Controlling interest in consolidated net income December 31 2019 2020 Accounts receivable $229,000 $318,000 Inventory Prepaid selling expenses Accounts payable Accrued selling expenses Accrued administrative expenses 194,000 234,000 26,000 30,000 79,000 99,000 96,000 56,000 84,000 39,000