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The income statement discdosed the folowing items for the year $ 65,000 Depreciation expense Gain on disposal of equipment 27,500 Net income 620,000 On the income statement when The changes in the current asset and lability accounts for the year are as follows: Increase (Decrease) Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable Dividends payable $11200 (6 350) (1.200) (4 200) 1,650 2,500 Required: statenent of cash fous using the indirect method Refer to the Amount minus sign to indicate cash outflows, cash A Prepare the Cash Flows from Operating Activtes section of the Descrptons list provded for the exact wording of the answer choices for text entres Use the payments in cash and for any adjustments, if required B. Briefy explain why net cash fows from operating activibies is different from net income

A Prepare the Cash lows from Operating Actvides secton of the statemert of cash ouws using the indred method Reter to the Amount Descriptions Kt provided for the exact wording of the answer choices for hext entries Use the minus sign to indcae payments decreases in cash and for any adustments, if required Statement of Cash Flows (partal) 1 Cash fows from operating atintes Adustments to reconole net income to net cush fow from cpeting activitbes Chngs in cument operating assets and lubilities: ng

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A. Statement of Cash flows (Partial): Amount Cash flows from Operating Activities: Net Income Adjustments to Reconcil Net Income with cash flow from Operating activities Add: Depreciation Expense Less: Gain on Disposal of Equipment Changes in Current Operating Assets and Liabilities: Less: Increase in accounts Receivable Add: Decrease in Inventory Add: Decrease in Prepaid Insurance Less: Decrease in Accounts Payable Add: Increase in Income tax payable Cash flows from Operating Activities $ 620,000.00 $ 65,000.00 S (27,500.00) $ (11,200.00) $ 6,350.00 $1,200.00 S(4,200.00 $1,650.00 $ 651,300.00 B. Differences between Net Cash flow from Operating activities and Net Income is due to Non Cash expenses like Depreciation and changes in current assets and liabilities inclusion in Net Income of those items which are relating to Investing or financin activities

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