The net income reported on the income statement for the current year was $176,400. Depreciation recorded on equipment and a building amounted to $68,600 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

End of Year Beginning of Year

Cash $ 54,000 $ 61,500

Accounts receivable (net) 68,000 73,400

Inventories 151,500 139,600

Prepaid Expenses 8,200 10,400

Accounts Payable (merchandise creditors) 61,250 68,900

Salaries Payable 10,500 7,600

a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.

b. If the direct method had been used, would the net cash flow from operating activities have been the same? Explain.

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