Operating Activities SectionIndirect Method

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

	December 31
	2016		2015
Accounts receivable	$43,310		$34,610
Inventory	29,980		39,890
Prepaid rent	17,420		15,180
Totals	$90,710		$89,680
Accounts payable	$26,320		$19,330
Income taxes payable	5,570		9,640
Interest payable	15,480		12,470
Totals	$47,370		$41,440

Net income for 2016 is $41,120. Depreciation expense is $18,780. Assume that all sales and all purchases are on account.

Required:

Question Content Area

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, 2016

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 -

Question Content Area

2. Net cash inflow from operating activities is $fill in the blank 9c33a8f7ef9c04a_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

.