The following journal entries were recorded by Lauren Retailing during the month of July. 1. Cash Accounts Receivable Sales 5,000 3,000 8,000 4. Accounts Payable Cash 2,800 2,800 2. Cash Accounts Receivable 2,000 2,000 5. Cost of Goods Sold Inventory 3,700 3,700 3. Inventory Accounts Payable 5,800 5,800 6. Accrued Expenses Accrued Payables 2,500 2,500 REQUIRED:

a. Prepare an income statement and the operating section of a statement of cash flows.

b. Explain why net income is not equal to net cash flow from operations, and reconcile the two numbers.