The following information is provided for HMG Company:

Required
Prepare the operating activities section of the statement of cash flows using the
a) Direct method
b) Indirect method.

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Balances at 12/31 Accounts receivable Inventory Supplies Accounts payable Taxes payable Interest payable 2012 26,000 2,000 4,000 2,000 1,500 2011 2,500 1,500 32,000 1,000 3,000 3,500 2,500 2012 Income Statement 80,000 55,000 25,000 6,000 2,000 S 2,000 17,000 4,000 $13,000 4,000 9,000 Sales Cost of goods sold Gross profit Supplies expense Depreciation expense Total operating expenses Income before interest and taxes Interest expense Income before taxes Income tax expense Net Income