Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $318,400. 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 $87,880 $92,270 113,860 Accounts receivable (net) 111,430 Inventories 219,700 196,170 Prepaid expenses 12,220 13,010 98,160 102,970 Accounts payable (merchandise creditors) Salaries payable 14,150 12,830 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 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation DIC Changes in current operating assets and liabilities: Decrease in accounts receivable 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 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses 1101 Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities Feedback b. If the direct method had been used, would the net cash flow from operating activities have been the same? Yes