a. Compare and contrast the direct method and the indirect method for reporting cash flows from operating activities.

b. Prepare a statement of cash flows for Chapman Company for the year ended May 31, 2020, using the direct method. Be sure to support the statement with appropriate calculations. (A reconciliation of net income to net cash provided is not required.)

c. Using the indirect method, calculate only the net cash flow from operating activities for Chapman Company for the year ended May 31, 2020.

1. All sales during the year were made on account. 2. All merchandise was purchased on account, comprising the total accounts payable account. 3. Plant assets costing $98,000 were purchased by paying $28,000 in cash and issuing 7,000 shares of stock. 4. The "other expenses" are related to prepaid items. 5. All income taxes incurred during the year were paid during the year. 6. In order to supplement its cash, Chapman issued 2,000 shares of common stock at par value. 7. Cash dividends of $105,000 were declared and paid at the end of the fiscal year. 8. The bonds were sold at par. Chasman Company Income Statement