Cash flows from operating activities—indirect method Obj. 1, 2 The income statement disclosed the following items for the year:

Depreciation expense $ 57,600 Gain on disposal of equipment 33,600 Net income 508,000 The changes in the current asset and liability accounts for the year are as follows:
Increase (Decrease)
Accounts receivable $ 8,960 Inventory (5,120)
Prepaid insurance (1,920)
Accounts payable (6,080)
Income taxes payable 1,410 Dividends payable 2,200

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.AppendixLO1