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Pita Pan, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. 12/31/20X3 12/31/20X2

Pita Pan, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements.

12/31/20X3 12/31/20X2
Accounts receivable $47,000 $38,000
Prepaid insurance $4,000 $3,000
Wages payable $18,000 $13,500
Interest payable $1,000 $4,800
Sales revenue $230,000
Cost of goods sold $165,000
Wages expense $98,000
Insurance expense $8,200
Interest expense $11,200

Calculate the amount related to prepaids that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount.

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