Hardware Suppliers reports net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this yearâ€™s and last yearâ€™s balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000.
Prepare the operating activities section of the statement of cash flows using the indirect method. Do you see a pattern in Hardware Suppliersâ€™ adjustments to net income to arrive at operating cash flows? What might this imply?