REPORTING NET CASH FLOW FROM OPERATING ACTIVITIES The following information is available for Bernard Corporation:

Net income $206,000 Decrease in accounts receivable 4,900 Increase in inventory 15,300 Decrease in prepaid rent 2,100 Increase in salaries payable 14,400 Increase in income taxes payable 11,200 Increase in notes payable 20,000 Depreciation expense 42,000 Loss on sale of equipment 5,000 Required:

. Prepare the net cash flows from operating activities using the indirect method.

. What are the causes of the major differences between net income and net cash flow from operating activities?

Exercise