Jon Harland is a wheat farmer. He owns farm equipment and buildings that cost $600,000 when purchased several years ago. He owes a local bank $425,000 for loans used to purchase these assets. In 2004, Jon sold $650,000 of wheat he raised during the year. He incurred operating costs of $585,000 to produce the wheat. This amount included $33,750 of interest on the bank loans and $52,500 of depreciation on the plant assets. In addition, Jon repaid $40,000 of the outstanding loan balance. The sales and all operating costs, except depreciation, were for cash. How much net income did Jon earn in 2004? What was his net cash flow for the year? Explain the difference.