Cash Flows from Operating ActivitiesIndirect Method

The net income reported on the income statement for the current year was $131,800. Depreciation recorded on store equipment for the year amounted to $21,700. 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	$51,270		$47,170
Accounts receivable (net)	36,760		34,860
Merchandise inventory	50,190		53,070
Prepaid expenses	5,640		4,480
Accounts payable (merchandise creditors)	48,040		44,620
Wages payable	26,250		29,150

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 outflows, cash payments, decreases in cash, or any negative adjustments.

Statement of Cash Flows (partial)
Cash flows from operating activities:
Net income	$fill in the blank 7e3d0afa507ffb9_2
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	fill in the blank 7e3d0afa507ffb9_4
Changes in current operating assets and liabilities:
Increase in accounts receivable	fill in the blank 7e3d0afa507ffb9_6
Decrease in merchandise inventory	fill in the blank 7e3d0afa507ffb9_8
Increase in prepaid expenses	fill in the blank 7e3d0afa507ffb9_10
Decrease in accounts payable	fill in the blank 7e3d0afa507ffb9_12
Decrease in prepaid expenses	fill in the blank 7e3d0afa507ffb9_14
Net cash flow from operating activities		$fill in the blank 7e3d0afa507ffb9_15

b. Cash flows from operating activities differs from net income because it does not use the of accounting. For example revenues are recorded on the income statement when .