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3 Preparing a Schedule of Cash Flows from Operating Activities: Indirect Method E 7. For the year ended June 30, 2011, net income for Freed Corporation was $14,800. Depreciation expense was $4,000. During the year, accounts receivable increased by $8,800, inventories increased by $14,000, prepaid rent decreased by $2,800, accounts payable increased by $28,000, salaries payable increased by $2,000, and income taxes payable decreased by $1,200. Use the indirect method to prepare a schedule of cash flows from operating activities