Cash flows from operating activities—indirect method Obj. 1, 2 The net income reported on the income statement for the current year was $93,700. Depreciation recorded on store equipment for the year amounted to $31,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

End of Year Beginning of Year Cash $24,100 $19,700 Accounts receivable (net) 65,000 56,000 Inventories 47,200 50,000 Prepaid expenses 3,250 8,000 Accounts payable (merchandise creditors) 23,400 17,200 Wages payable 5,300 6,400

a. Prepare the “Cash flows from operating activities” section of the statement of cash flows, using the indirect method.

b. Briefly explain why net cash flow from operating activities is different than net income.

AppendixLO1