Alfonza Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company's 2017 and 2016 year-end balance sheets:
Account Title 2017 2016
Accounts receivable......................... $16,200.................. $17,800
Accounts payable............................. $7,600.................... $9,100
The 2017 income statement showed net income of $31,600.
Required
a. Prepare the operating activities section of the statement of cash flows.
b. Explain why the change in the balance in accounts receivable was added to or subtracted from the amount of net income when you completed Requirement a.
c. Explain why the change in the balance in accounts payable was added to or subtracted from the amount of net income when you completed Requirement a.