The account balances for the non-cash current assets and current liabilities of Kid-game Software Inc. are as follows:

During 2020, Kid-game Software Inc. reported depreciation expense of $57,000. All purchases and sales are on account. Profit for 2020 was $253,000.

Required

1. Prepare the operating activities section of the statement of cash flows using the indirect method.

2. Explain why cash flows from operating activities are different from profit.

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December 31 2020 2019 Accounts receivable. $127,000 $104,900 119,100 Inventory. 90,300 Prepaid expenses. Totals. Accounts payable. Salaries payable. 48,200 53,600 $270,900 $ 85,000 $272,200 $ 65,200 25,500 36,900 Interest payable. 48,200 39,700 $158,700 $141,800 Totals