P17-3B Sable Island Ltd. is a private company reporting under ASPE. Its income statement contained the following condensed information: $900,000 SABLE ISLAND LTD. Income Statement Year Ended December 31, 2017 Fees earned Operating expenses $642,000 Depreciation expense 50,000 Gain on sale of equipment (23,000) Profit from operations Other expenses Interest expense Profit before income tax Income tax expense Profit 669,000 231,000 5,000 226,000 56,500 $169,500 Sable Island's balance sheet contained the following comparative data at December 31: 2017 2016 Accounts receivable $48,000 $56,000 14,000 11,500 Prepaid expenses 41,000 36,000 Accounts payable Income tax payable 4,000 9,250 Interest payable 1,000 550 Unearned revenue 13,750 10,000 Additional information: Accounts payable relate to operating expenses. Instructions Prepare the operating activities section of the cash flow statement using either (a) the indirect method or (b) the direct method, as assigned by your instructor. TAKING IT FURTHER What are the advantages and disadvantages of the indirect method of determining cash provided (used) by operating activities?

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