(Solved): Statement of Cash Flows - Indirect Method for Operating Activities The indirect method reconciles n ...

Statement of Cash Flows - Indirect Method for Operating Activities The indirect method reconciles net income to cash flow from operating activities by backing out noncash flow items as well as items that are unrelated to operating activities such as gains and losses from sales of investments and retirement of debt. \begin{tabular}{|l|r|r|} \hline Net Income & Amounts & $\begin{array}{l}\text{ Cash Flow from }\\ \text{ Operating Activities }\end{array}$ \\ \hline Increase in Accounts Receivable & 139,000 & \\ \hline Decrease in Accounts Payable & 4,700 & \\ \hline Decrease in Merchandise Inventory & 3,100 & \\ \hline Depreciation Expense & 1,900 & \\ \hline $\begin{array}{l}\text{ Debt classified as trading securities were purchased }\\ \text{ during the year. Unlike other purchases on }\\ \text{ investments, investments in trading securities are }\\ \text{ considered operating activities }\end{array}$ & 2,500 & \\ \hline $\begin{array}{l}\text{ A gain on sale of investments in stock }\$400\text{ was }\\ \text{ reported in the income statement }\end{array}$ & & \\ \hline Increase in Prepaid Insurance & 600 & \\ \hline Decrease in Rent Received in Advance & 14,600 & \\ \hline \begin{tabular}{l} Net Cash Flow from Operating Activities \\ \hline \end{tabular} & 350 & \\ \hline \end{tabular}