Find closest multiple of $100$ to $354$. We see that $3 \times 100 = 300$ is the nearest. Now subtract $300$ from $354$ to get reminder $54$. Add $3$ to quotient.
Find closest multiple of $100$ to $540$. We see that $5 \times 100 = 500$ is the nearest. Now subtract $500$ from $540$ to get reminder $40$. Add $5$ to quotient.
Since $40$ is less than $100$, stop the division. The reminder is $40$. The topmost line $0035$ is the quotient. Remove all zeros at the start of the quotient to get the actual quotient $35$.