Problem
Portions of the financial statements for Parnell Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2016 ($ in 000s) Revenues and gains: Sales $850 Gain on sale of buildings 10 $ 860 Expenses and loss: Cost of goods sold $325 Salaries 125 Insurance 45 Depreciation 128 Interest expense 55 Loss on sale of machinery 12 690 Income before tax 170 Income tax expense 85 Net income $ 85 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2016 and 2015 ($ in 000s) Year 2016 2015 Change Cash $144 $95 $49 Accounts receivable 334 211 123 Inventory 316 435 (119 ) Prepaid insurance 61 98 (37 ) Accounts payable 220 112 108 Salaries payable 112 88 24 Deferred income tax liability 70 57 13 Bond discount 185 210 (25 )
Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)
2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)