Cash Flows from Operating Activities--indirect Method The net income reported on the income statement for the current year was $254,000. Depreciation recorded on equipment and a building amounted to $75,900 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 $65,020 82.450 162,550 $68,270 84,250 145,140 Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) Salaries payable 9,040 72,630 10,470 9,630 76,190 9,490 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: Adjustments to reconcile net income to net cash flow from operating activities [ 1 1 Changes in current operating assets and liabilities: 9,630 Prepaid expenses Accounts payable (merchandise creditors) Salarles payable 9,040 72,630 76,190 9,490 10,470 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: Decrease in accounts receivable Decrease in inventories Increase in accounts payable Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities O mn b. If the direct method had been used, would the net cash flow from operating activities have been the same? Yes