Operating Activities SectionIndirect Method

The following account balances for the noncash current assets and current liabilities of Suffolk Company are available:

	December 31
	2017		2016
Accounts receivable	$42,730		$34,890
Inventory	29,800		39,840
Prepaid rent	17,340		15,450
Totals	$89,870		$90,180
Accounts payable	$26,020		$19,050
Income taxes payable	5,900		9,810
Interest payable	15,080		11,760
Totals	$47,000		$40,620

Net income for 2017 is $43,100. Depreciation expense is $18,300. Assume that all sales and all purchases are on account.

Required:

1. Prepare the Operating Activities section of the statement of cash flows using the indirect method. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.

Suffolk Company Partial Statement of Cash Flows For the Year Ended December 31, 2017

Cash Provided by Operating Activities
Decrease in accounts payableDecrease in accounts receivableDecrease in prepaid rentIncrease in income taxes payableNet income	$- Select -
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease in accounts payableDecrease in accounts receivableDecrease in prepaid rentDepreciation expenseIncrease in income taxes payableIncrease in inventory	- Select -
Decrease in accounts payableDecrease in accounts receivableDecrease in interest payableIncrease in accounts receivableIncrease in income taxes payableIncrease in inventory	- Select -
Decrease in accounts payableDecrease in accounts receivableDecrease in interest payableDecrease in inventoryIncrease in income taxes payableIncrease in inventory	- Select -
Decrease in accounts payableDecrease in accounts receivableDecrease in prepaid rentIncrease in income taxes payableIncrease in inventoryIncrease in prepaid rent	- Select -
Decrease in accounts payableDecrease in accounts receivableDecrease in prepaid rentIncrease in accounts payableIncrease in income taxes payableIncrease in inventory	- Select -
Decrease in accounts payableDecrease in accounts receivableDecrease in income taxes payableDecrease in prepaid rentIncrease in income taxes payableIncrease in inventory	- Select -
Decrease in accounts payableDecrease in accounts receivableDecrease in interest payableIncrease in income taxes payableIncrease in interest payableIncrease in inventory	- Select -
Net cash inflow from operating activitiesNet cash outflow from operating activities	$- Select -

2. Net cash inflow from operating activities is $fill in the blank f35c07f5ef83f98_1 and the primary reason why it is higher than net income is

decrease in inventorydecrease in prepaid rentdepreciationincrease in accounts payableincrease in interest payableincrease in inventory

. Other reasons for the higher amount of net cash inflow from operating activities are

increase in inventoryincrease in accounts payableincrease in accounts receivabledecrease in accounts payabledecrease in accounts receivabledecrease in income taxes payable

and

increase in inventoryincrease in accounts receivableincrease in prepaid rentdecrease in inventorydecrease in interest payabledecrease in income taxes payable

.