Item $2$: Entity B reported net income of $$138,000$ for the current year. Depreciation recorded on buildings and equipment amounted to $$34,000$ for the year. Balances of needed current asset and current liability accounts at the beginning and end of the year are as follows. Be sure to compute the change by subtracting the beginning of year balance from the end of year balance. Must show work.

$\backslash$table$[[,$End of Year,,Beginning of Year,Change$],[$Accounts receivable,$98,000,,89,000,9,000$ inc$],[$Inventory$,168,000,,173,000,],[$Prepaid expenses,$28,000,22,000,,],[$Accounts payable,$85,000,92,000,,],[$Taxes payable,$13,000,5,000,,]]$

Also, a gain on the sale of equipment no longer needed of $$1,500$ was reported.

Instructions: Compute the changes in the accounts for each year and then prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Net income

$138,000$

Adjustments to reconcile net income to cash flow from

operating activities: $[$start here$]$