The account balances for the non-cash current assets and current liabilities of Peartree Software Inc. are as follows:

During 2014, Peartree reported depreciation expense of $56,000. All purchases and sales are on account. Net income for 2014 was $252,000.

Required
1. Prepare the operating activities section of the statement of cash flows using the indirect method.
2. Explain why cash flows from operating activities are different from netincome.

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December 31 2014 2013 S103,600 117,600 89,600 53,200 Prepaid expenses 47,600 $268,800 S 64,400 36,400 39,200 $140,000 Salaries payable. 25,200 47600