Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $185,000. Depreciation recorded on equipment and a building amounted to $96,000 for the year. 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	$ 75,900		$ 86,150
Accounts receivable (net)	84,550		90,000
Inventories	186,200		175,000
Prepaid expenses	3,600		4,500
Accounts payable (merchandise creditors)	91,500		110,000
Salaries payable	7,200		4,000

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 out flows, cash payments, decreases in cash, or any negative adjustments.

b. If the direct method had been used, would the net cash flow from operating activities have been the same?