The following account balances for the non-cash current assets and current liabilities of Suffolk Company are available:

Net income for 2014 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 flows using the indirect method.
2. Provide a brief explanation as to why cash flow from operating activities is more or less than the net income of the period.

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December 31 2014 2013 $43,000 $35,000 Accounts receivable Inventory 40,000 30,000 Prepaid rent 17,000 15,000 Totals $90,000 $90,000 Accounts payable Income taxes payable Interest payable $26,000 $19,000 6,000 10,000 12,000 15,000 Totals $47,000 $41,000