Exhibit 12-4
Manning Company Uses the Indirect Method to Prepare

Exhibit 12-4
Manning Company uses the indirect method to prepare the statement of cash flows.The following amounts are shown in its December 31,2017,financial statements.
$$\begin{array} { l c c } & \text { December 31, } 2017 & \text { December 31, 2016 } \\ \text { Accourts receivable } & \$ 663,000 & \$ 600,000 \\\text { Cost of goods sold } & \$ 1,800,000 & \\\text { Sales reveruse } & \$ 2,400,000 & \\\text { Accourts payable } & \$ 255,000 & \$ 195,000 \\\text { Irventory } & \$ 270,000 & \$ 375,000 \\\text { Salaries payable } & \$ 45,000 & \$ 30,000 \\\text { Salaries expense } & \$ 165,000 & \$ 144,000\end{array}$$
-Refer to Exhibit 12-4.How will the change in salaries payable be reported in the operating activities section of the statement of cash flows?

A) The increase of $15,000 will be added to net income.
B) The increase of $15,000 will be subtracted from cost of goods sold.
C) The increase of $15,000 will be subtracted from net income.
D) The increase of $15,000 will be added to sales revenue.
E) None of the answer choices is correct.