Operating Activities Section—Indirect Method The following account balances for the noncash current assets and current liabilities of Suffolk Company are available:

December 31 2010 2009 Accounts receivable $43,000 $35,000 Inventory 30,000 40,000 Prepaid rent 17,000 15,000 Totals $90,000 $90,000 Accounts payable $26,000 $19,000 Income taxes payable 6,000 10,000 Interest payable 15,000 12,000 Totals $47,000 $41,000.

Net income for 2010 is $40,000. Depreciation expense is $20,000. Assume that all sales and all purchases are on account.
Required 1. Prepare the Operating Activities section of the statement of cash fl ows using the indirect method.
2. Provide a brief explanation as to why cash fl ow from operating activities is more or less than the net income of the period.AppendixLO1