Preparing the Operating Activities Section

The data below were provided by the accounting records of Franklin Company.

Net income (accrual basis)	$32,000
Depreciation expense	6,400
Decrease in salaries payable	960
Decrease in trade accounts receivable	1,440
Increase in merchandise inventory	2,000
Amortization of patent	80
Increase in long-term liabilities	8,000
Sale of capital stock for cash	20,000
Amortization of premium on bonds payable	160
Accounts payable increase	3,200
Stock dividend issued	8,000

Required

Prepare the reconciliation of net income with cash flow from operations for inclusion in the statement of cash flows (indirect method).

Note: If an item is not included in the operating activities section, leave the answer blank (zero).

Cash flows from Operating Activities
Net income
Adjustments:
Depreciation expense
Amortization expensepatent
Amortization of premium on bonds payable
Decrease in accounts receivable
Increase in merchandise inventory
Increase in accounts payable
Increase in long-term liabilities
Decrease in salaries payable
Sale of capital stock for cash
Stock dividend issued
Net cash provided (used) by operating activities