Cash Flows from Operating ActivitiesIndirect Method The net income reported on the income statement for the current year was $318,500. Depreciation recorded on equipment and a building amounted to $95,200 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $88,860 $93,300 Accounts receivable (net) 112,670 115,130 Inventories 222,150 198,360 Prepaid expenses 12,350 13,160 Accounts payable (merchandise creditors) 99,260 104,120 Salaries payable 14,310 12,970 a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income $ Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventories Increase in prepaid expenses Increase in accounts payable Decrease in salaries payable Net cash flow from operating activities $ Feedback Compute the increases and decreases in the current asset/liability accounts over the period. What affect would these changes have on cash? Learning Objective 1, Learning Objective 2. b. If the direct method had been used, would the net cash flow from operating activities have been the same?