Use the indirect method to determine cash flows from operating activities Mendez Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company's 2012 and 2011 year-end balance sheets

The 2012 income statement showed net income of $27,200.
Required
a. Prepare the operating activities section of the statement of cash flows.
b. Explain why the change in the balance in accounts receivable was added to or subtracted from the amount of net income when you completed Requirement α.
c. Explain why the change in the balance in accounts payable was added to or subtracted from the amount of net income when you completed Requirement α.

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Account Title 2012 2011 Accounts receivable Accounts payable $15,200 8,800 $16,500 9,200