Indirect Method - Preparing the Operating Activities Section The following data are from the accounting records of Clooney Company. Description Amount Net income (accrual basis) $ 40,000 Depreciation expense 7,800 Decrease in salaries payable 1,200 Decrease in trade accounts receivable 1,800 Increase in merchandise inventory 2,500 Amortization of patent Increase in long-term liabilities 10,000 Sale of capital stock for cash 25,000 Accounts payable increase 4,000 Prepare the operating activities section of the statement of cash flows for Clooney Company using the indirect method. Cash Flows from Operating Activities 100 Adjustments: Depreciation expense Amortization of patent Decrease in trade accounts receivable Increase in merchandise inventory Decrease in salaries payable $