Refer to all of the facts in Exercise 5-17.

Masthead Company’s comparative balance sheets included inventory of $180,400 at December 31, 2009, and $241,200 at December 31, 2010. Masthead’s comparative balance sheets also included accounts payable of $85,400 at December 31, 2009, and $78,400 at December 31, 2010. Masthead’s accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory on account. Cost of goods sold, as reported by Masthead on its 2010 income statement, amounted to $1,200,000.

Required

Assume instead that Masthead uses the indirect method to prepare its statement of cash flows. Indicate how each item will be reflected as an adjustment to net income in the Operating Activities category of the statement of cash flows.