The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2018, appears below:

Service revenue............................................................$ 900,000

Operating expenses..........................................................700,000

Income before income taxes................................................200,000

Income tax expense...........................................................80,000

Net income.................................................................$ 120,000

The following balance sheet information also is available:

In addition, the following transactions took place during the year:
1. Common stock was issued for $100,000 in cash.
2. Long-term investments were sold for $50,000 in cash. The original cost of the investments also was $50,000.
3. $80,000 in cash dividends was paid to shareholders.
4. The company has no outstanding debt, other than those payables listed above.
5. Operating expenses include $30,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2018 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities.
2. Prepare the cash flows from operating activities section of Diversified's 2018 statement of cash flows using the indirect method.

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12/31/2018 $275,000 120,000 70,000 10,000 12/31/2017 Cash Accounts receivable Accounts payable (operating expenses) Income taxes payable $70,000 100,000 60,000 15,000