The income statement for Dunn Products Inc. is presented below.
Dunn Products Inc.
Income Statement
For the year ended December 31, 2019

The following balance sheet changes occurred during the year:
€¢ Accounts receivable decreased by $85,150.
€¢ Inventory decreased by $138,620.
€¢ Prepaid expenses increased by $112,400.
€¢ Accounts payable decreased by $67,225.
€¢ Salaries payable increased by $18,300.
Required:
1. Prepare the net cash flows from operating activities using the indirect method.
2. What are the causes of the major differences between net income and net cash flow from operating activities?

Sales Cost of goods sold Gross margin Other expenses: Salaries expense Administrative expense Depreciation expense Bad debt expense $3,584,600 $1,027,100 $455,100 214,500 37,000 Income taxes expense Net income 981,800 45,300