Effects of Wendy’s International’s Changes in Current Assets and Liabilities on Its Statement of Cash Flows The following items, listed in alphabetical order, are included in the Current Assets and Current Liabilities categories on the consolidated balance sheet of Wendy’s International, Inc., at December 31, 2006 and January 1, 2006:

Required 1. Wendy’s uses the indirect method to prepare its statement of cash flows. Prepare the Operating Activities section of the cash flow statement, which indicates how each item will be reflected as an adjustment to net income.
2. If you did not include any of the preceding items in your answer to (1), explain how these items would be reported on the statement of cash flows.

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(In thousands) Current liabilities Accounts payable Accrued expenses December 31, 2006 January 1, 2006 $ 93,465 $ 92,340 Taxes Salaries and wages Insurance Other 47,329 34,871 46,138 60,984 57,353 58,147 32,199 34,079 Advertising fund restricted liabilities 28,568 35,651 Current portion of long-term obligations 87,396 2,497 Total current liabilities 2,218 264,783 Current liabilities of discontinued operations 394,666 583,352