Adjustments to reconcile net income to net cash provided by operating activities 3. Show how each item should be reported in the statement of cash flows. Use parentheses for deductions. Instructions 310,000 Net Inome.. Depreciation expense, $45,000 Increase in accounts receivable, $55,000 Decrease in inventory, $12,000 Increase in accounts payable, $6,000 Increase in prepaid expenses, $4,000 Decrease in income taxes payable, $3,500 Gain on disposal of land, $7,500 Net cash provided (used) by operating activities