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The net income reported on the income statement for the current year was $423,900. Depreciation recorded on store equipment for the year amounted to $17,560.

The net income reported on the income statement for the current year was $423,900. Depreciation recorded on store equipment for the year amounted to $17,560. 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 $42,670 $40,170
Accounts receivable (net) 30,670 27,430
Inventories 38,830 45,750
Prepaid expenses 3,680 4,890
Accounts payable (merchandise creditors) 39,630 35,780
Wages payable 21,610 23,900

Required:

a. Prepare the Cash Flows from Operating Activities section of the statement 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. Briefly explain why net cash flow from operating activities is different than net income.

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