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Portions of the financial statements for Software Associates are provided below. SOFTWARE ASSOCIATES Income Statement For the year ended December 31, 2018 Net sales $ 640,000 Expenses: Cost of goods sold $385,000 Operating expenses 123,000 Depreciation expense 32,300 Income tax expense 45,500 Total expenses 585,800 Net income $ 54,200 SOFTWARE ASSOCIATES Selected Balance Sheet Data December 31, 2018, compared to December 31, 2017 SOFTWARE ASSOCIATES Selected Balance Sheet Data December 31, 2018, compared to December 31, 2017 Decrease in accounts receivable $9,300 Decrease in inventory 12,300 Increase in prepaid rent 2,300 Decrease in salaries payable 3,300 Increase in accounts payable 6,300 Increase in income tax payable 7,300 Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method. (List cash outflows and any decrease in cash as negative amounts.) SOFTWARE ASSOCIATES Statement of Cash Flows (partial) For the Year Ended December 31, 2018 Cash Flows from Operating Activities: Net income $ 54,200 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense 32.300 Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method. (List cash outflows and any decrease in cash as negative amounts.) 6 SOFTWARE ASSOCIATES Statement of Cash Flows (partial) For the Year Ended December 31, 2018 Cash Flows from Operating Activities: Net income 54,200 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense 32,300 Decrease in accounts receivable 9,300 Decrease in inventory 12,300 Increase in accounts payable 6,300 Increase in income tax payable 7,300 Increase in prepaid rent (2,300) Decrease in salaries payable (3,300) Net cash flows from operating activities $ 116,100

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