The direct method produces the following statement of cash flows for Parnell Company. 790 SALES – INCREASE IN ACCOUNT REC.106 cogs – Desrease in inventory and increase in account payable Cash paid to suppliers $102.00

Parnell Company’s statement of cash flows using the indirect method. Cash Flows From Operating Activities: Net Income $82.00 Adjustments: Gain on Sale of Buildings $122.00 $12.00 Changes in operating assets and liabilities Decreased inventory Increased accounts payable Increased salaries payable Increased deferred income tax liability Increased bond discount -$106.00 $102.00 $19.00 $20.00 $9.00 $13.00