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Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $154,000. Depreciation recorded on store equipment for the year amounted to $25,400. 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 $61,600 $56,670 Accounts receivable (net) 44,170 41,880 Merchandise inventory 60,310 63,750 Prepaid expenses 6,780 5,380 Accounts payable (merchandise creditors) 57,720 53,610 Wages payable 31,540 35,020 a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in merchandise inventory Increase in prepaid expenses Increase in accounts payable Decrease in wages payable Net cash flow from operating activities Changes in Current Operating Assets and Liabilities-Indirect Method Covington Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, Year 2 Dec. 31, Year 1 Accounts receivable $23,400 $30,000 Inventory 64,000 56,100 Accounts payable 13,300 16,400 Dividends payable 16,000 17,000 Adjust net income of $77,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities