During the year, Hepworth Company earned a net income of $62,425. Beginning and ending balances for the year for selected accounts are as follows:

Account
	Beginning	Ending
Cash	$102,000	$121,200
Accounts receivable	68,100	99,350
Inventory	36,500	52,100
Prepaid expenses	27,400	29,600
Accumulated depreciation	81,400	91,000
Accounts payable	45,400	54,525
Wages payable	27,300	14,400

There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows.

Required:

1.	Prepare a schedule of operating cash flows using the indirect method.
2.	Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,975. What is the ending balance of accounts payable?
	Conceptual Connection: Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? 2. Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,975. What is the ending balance of accounts payable? Conceptual Connection: Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? YES/NO

Amount Descriptions Refer to the list below for the exact wording of an amount description within your Statement of Cash Flows. Amount Descriptions Decrease in accounts payable Decrease in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in wages payable Depreciation expense Increase in accounts payable Increase in accounts receivable Increase in inventory Increase in prepaid expenses Increase in wages payable Net cash from operating activities Net income Net loss Operating Cash Flows - Indirect Method 1. Prepare a schedule of operating cash flows using the indirect method. (Note: Use a minus sign to indicate any decreases in cash or caslh outfiows. Refer to the Amount Descriptions list provided for the exact wording text entries.) of the answer choices for Hepworth Company Schedule of Operating Cash Flows 1Cash flows from operating activities: Add (deduct) adjusting items: 10