The direct versus the indirect method of determining cash flows from operating activities The following accounts and corresponding balances were drawn from Larry Company's 2012 and 2011 y ear -end balance sheets .

The 2012 income statement is shown below:

Required
a. Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method.

Transcribed Image Text:

Account Title 2012 2011 Accounts receivable Prepaid rent Utilities payable Other operating expenses payable $75,000 900 1,200 33,000 $78,000 1,500 34,000