The net income reported on the income statement for the current year was $346,400. Depreciation recorded on equipment and a building amounted to $99,330 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$90,570$96,530

Accounts receivable (net)111,490119,020

Inventories222,910208,840

Prepaid expenses13,50014,540

Accountspayable(merchandisecreditors)96,260103,590

Salaries payable15,15012,980

Required:

A.Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.B.If thedirect methodhad been used, would the net cash flow from operating activities have been the same?

A. Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Statement of Cash Flows (partial)

1

Cash flows from operating activities:

2

3

Adjustments to reconcile net income to net cash flow from operating activities:

4

5

Changes in current operating assets and liabilities:

6

7

8

9

10

11