6. (TCO F) Cash flows from operating activities (indirect and direct methods).
Presented below is the income statement of Smiling Tiger Inc.

Sales

$1020000

Cost of goods sold

640000

Gross profit

$380000

Operating expenses

230000

Income before income taxes

150000

Income taxes

60000

Net income

$90000

In addition the following information related to net changes in working capital is presented.

Debit

Credit

Cash

$50000

Accounts receivable

34500

Inventories

$25000

Salaries payable (operating expenses)

60000

Accounts payable

450000

Income taxes payable

12000

Depreciation expense for the year was $54000

Deferred tax liability account increased $6500

Required:

Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows:

(a)

using the indirect method.

(b)

using the direct method.