Shown below is information from the financial statements of Mike Company for 2019

	End of Year	Beginning of Year
Accounts receivable	201,000	221,000
Inventory	249,000	233,000
Short-term prepayments	12,000	9,500
Accounts payable (for merchandise)	177,000	170,000
Accrued operating expenses payable	25,500	33,200
Accrued income taxes payable	12,600	15,500
Net sales	801,000
Cost of goods sold	465,000
Operating expenses (including depreciation of 40,000)	300,000
Income taxes expense	39,000

Instructions:

1. On the basis of the above information, prepare a partial statement of cash flows for Mike Company, showing the computation of net cash flows from

   operating activities by the indirect method.

2. Identify three factors that may cause net income to differ from net cash flows from operating activities.

3. Briefly explain the difference between the direct and indirect methods of computing net cash flows from operating activities. Which method results in higher net cash flows?