Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $127,400. Depreciation recorded on store equipment for the year amounted to $21,000. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Cash Accounts receivable (net) Inventories End of Year Beginning of Year $48,790 $44,400 34,980 32,810 47,770 49,950 5,370 4,220 45,720 42,000 24,980 27,440 Prepaid expenses Accounts payable (merchandise creditors) Wages payable 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: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Cash flows from operating activities differs from net income because it does not use the accounting. For example revenues are recorded on the income statement when