The net income reported on the income statement for the current year was $600,000. Depreciation recorded on store equipment for the year amounted to $24,000. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

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

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Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Accounts payable (merchandise creditors) Wages payable End of Year $62,400 45,600 60,000 7,200 60,000 31,800 Beginning of Year $57,600 42,000 66,000 5,400 54,000 36,000