Green Brands, Inc. (GBI) presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from GBI’s Year 2 and Year 1 year-end balance sheets:
| Account Title | Year 2 | Year 1 | |||||
| Accounts receivable | $ | 21,300 | $ | 29,700 | |||
| Merchandise inventory | 58,700 | 50,000 | |||||
| Prepaid insurance | 18,400 | 25,700 | |||||
| Accounts payable | 26,100 | 18,900 | |||||
| Salaries payable | 4,650 | 4,150 | |||||
| Unearned service revenue | 900 | 2,850 | |||||
The Year 2 income statement is shown next:
| Income Statement | ||||
| Sales | $ | 611,000 | ||
| Cost of goods sold | (371,000 | ) | ||
| Gross margin | 240,000 | |||
| Service revenue | 4,700 | |||
| Insurance expense | (39,000 | ) | ||
| Salaries expense | (156,000 | ) | ||
| Depreciation expense | (5,500 | ) | ||
| Operating income | 44,200 | |||
| Gain on sale of equipment | 4,200 | |||
| Net income | $ | 48,400 | ||
b. Prepare the operating activities section of the statement of cash flows using the indirect method for Year
