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Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for the current year was $146,000. Depreciation recorded on store equipment

Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $146,000. Depreciation recorded on store equipment for the year amounted to $24,100. 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 $59,420 $54,070
Accounts receivable (net) 42,600 39,960
Merchandise inventory 58,170 60,830
Prepaid expenses 6,540 5,140
Accounts payable (merchandise creditors) 55,680 51,150
Wages payable 30,420 33,420

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:
Changes in current operating assets and liabilities:
Net cash flow from operating activities $

b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when .

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