Your boss asks you to examine the following income statement of Hamilton Hardware and Watson Glass:

In the notes to the financial statements, you notice that Hamilton Hardware uses the Straight-line method of depreciation and that Watson Glass uses the double-declining-balance method.(a) Assume that the dollar amounts for sales, cost of goods sold, and other expenses reflect total cash collections from customers, total cash paid for inventory, and total cash paid for other expense, respectively. Compute cash provided (used) by operating activities for each company, using each of the following:(b) Why is the cash provided (used) by operations different from net income? Which of the two methods shows this more clearly?(c) Would you agree or disagree with the following statement? Depreciation is an important source of cash of most companies. Explain your answer.

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Hamilton Hardware Watson Glass S900,000 (400,000) (50,000) (200,000) S250,000 Sales Cost of goods sold Depreciation expense Other expenses Net income S900,000 (400,000) (100,000) (200,000) $200,000