Exercise: The direct and indirect method

Extracts from the financial statements are as follows

Operating profit 80,000

Investment income 12,000

Finance costs (10,000)

Profit before tax 82,000

Tax (32,000)

Profit for the year 50,000

Other comprehensive income  

Revaluation gain 40,000

Total comprehensive income 90,000

Current assets    

Inventory 30,000 25,000

Receivables 20,000 26,000

Current liabilities    

Trade payables 14,000 11,000

Additional information
During the year depreciation of $50,000 and amortisation of $40,000 was charged to
profit.  Receipts from customers, combined with cash sales, were $800,000,
payments to suppliers of raw materials $400,000, other operating cash payments
were $100,000 and cash paid on behalf and to employees was $126,000. Interest paid
is $12,000 and taxation paid is $13,000.

Required:
(a) Using the direct method prepare the operating activities section of the statement of
cash flows.
(b) Using the indirect method determine the operating activities section of the statement
of cash flows.