Cash Flows from Operating Activities (Indirect and Direct Methods)
Presented

Cash flows from operating activities (indirect and direct methods)
Presented below is the latest income statement of Oxford Ltd.: $\begin{array}{l} \text{ Sales } ............................................................... & \$ 380,000 \\\text{ Cost of goods sold} ............................................ & 225,000 \\\text{ Gross profit} ..................................................... & \$ 155,000 \\\text{ Operating expenses} ..........................................& 85,000 \\\text{ Income before income taxes } .............................. & 70,000 \\\text{ Income taxes } .....................................................& 28,000 \\\text{ Net income } ........................................................ & \$ 42,000 \\ \end{array}$ In addition, the following information related to net changes in working capital is available: $\begin{array}{lc}&\text { Debit}&\text { Credit}\\\text { Cash } & \$ 12,000 \\\text { Accounts rece ivable (net) }& 8,000 \\\text { Inventories }&&\$19,400 \\\text { Salar ies payable (operating expenses) } &6,000\\\text { Accounts payable } && 9,000 \\\text { Income tax payable. }&3,000\end{array}$ Oxford Ltd. also reports that depreciation expense for the year was $ 13,700 and that the deferred tax liability account increased $ 2,600.
Instructions
Prepare a schedule calculating 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.