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Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $93,700. Depreciation recorded on store equipment for the year amounted to $31,200. 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 Prepaid expenses Accounts payable (merchandise creditors) Wages payable End of Year $24,100 65,000 47,200 3,250 23,400 5,300 Cash flows from operating activities: Net income Beginning of Year $19,700 56,000 50,000 8,000 17,200 6,400 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) Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: 93,700 31,200 to Indic ate cash outhows, 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: Increase in accounts receivable Decrease in inventories Decrease in prepaid expenses Increase in accounts payable Decrease in wages payable Net cash flow from operating activities Feedback 93,700 31,200 9,000 X 2,800 4,750 6,200 1,100 X 128,550 Check My Work Compute the increases and decreases in the current asset/liability accounts over the period. Determine what affect these changes would have on cash. b. Cash flows from operating activities differs from net income because it does not use the accrual basis of