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Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for the current year was $130,500. Depreciation recorded on store equipment

Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $130,500. Depreciation recorded on store equipment for the year amounted to $21,500. 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 $50,630 $46,580
Accounts receivable (net) 36,300 34,420
Inventories 49,570 52,400
Prepaid expenses 5,570 4,430
Accounts payable (merchandise creditors) 47,440 44,060
Wages payable 25,920 28,790

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.

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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