The statement of financial position of Lim Garden Supplies Inc. for December 31, 2016 and 2015, is as follows:

The statement of income for the year ended December 31, 2016, is as follows

The following additional information was taken from the records:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $196,000 cash.
d. The common shares were issued for cash.
e. There was a $144,000 debit to Retained Earnings for cash dividends declared.
f. The income taxes expense was paid in cash.
Instructions
1. Prepare a statement of cash flows using the indirect method of presenting cash flows from operating activities.
2. How does Lim Garden Supplies' cash flow compare to its net income? Summarize the changes that have caused the difference.

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Dec. 31, 2016 Dec. 31, 2015 Assets $ 220.640 $ 227,700 Cash. Accounts receivable (net) . 330,880 304,800 Inventories.. 464,800 454,600 Investments. 144,000 Equipment... Accumulated depreciation. Land.. 408,000 328,000 (160,500) (122,800) 320,000 $1,583,820 $1,336,300 Liabilities and Shareholders' Equity Accounts payable (merchandise creditors)..... Accrued expenses payable (operating expenses) Dividends payable . Common shares Retained earnings . 24 360,000 322,200 22,600 26,400 33.600 30.400 336,000 168,000 831,620 789,300 $1.583.820 $1.336,300 Sales . Cost of goods sold Gross profit ... Operating expenses: Depreciation expense Other operating expenses. Total operating expenses. $1,504,000 784,000 720,000 $ 37,700 448.280 485,980 Operating income Other income: 234,020 Gain on sale of investments. 52.000 Income before income taxes Income taxes expense 286.020 99,700 Net income 186.320