Preparing the Operating Activities Section

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

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).

\begin{tabular}{|l|r|} \hline Net income (accrual basis) & $40,000 \\ \hline Depreciation expense & 8,000 \\ \hline Decrease in salaries payable & 1,200 \\ \hline Decrease in trade accounts receivable & 1,800 \\ \hline Increase in merchandise inventory & 2,500 \\ \hline Amortization of patent & 100 \\ \hline Increase in long-term liabilities & 10,000 \\ \hline Sale of capital stock for cash & 25,000 \\ \hline Amortization of premium on bonds payable & 200 \\ \hline Accounts payable increase & 4,000 \\ \hline Stock dividend issued & 10,000 \\ \hline \end{tabular} Cash flows from Operating Activities \begin{tabular}{|l|l|} \hline Net income & $ \\ \hline Adjustments: & \\ \hline Depreciation expense & \\ \hline Amortization expense-patent \\ \hline Amortization of premium on bonds payable \\ \hline Decrease in accounts receivable \\ \hline Increase in merchandise inventory & \\ \hline Increase in accounts payable & \\ \hline Increase in long-term liabilities & \\ \hline Decrease in salaries payable & \\ \hline Sale of capital stock for cash & \\ \hline Stock dividend issued & $ \\ \hline Net cash provided (used) by operating activities & $ \\ \hline \hline \end{tabular}