Shinlund, Inc., reported a net cash flow from operating activities of $243,750 on its statement of cash flows for the year ended December 31, 2012. The following information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable .........$ 5,250
Decrease in inventories ..............13,050
Depreciation ...................20,100
Gain on sale of investments ............9,000
Increase in accounts payable ..........3,600
Increase in prepaid expenses ..........2,025
Increase in accounts receivable .........9,750
a. Determine the net income reported by Shinlund, Inc., for the year ended December 31, 2012.
b. Briefly explain why Shinlund’s net income is different than cash flows from operating activities.