The following information is taken from the operating section of the statement of cash flows (direct method) of battery builders, inc.:
collections from customers $ 28,000 payments to suppliers for purchases (13,000 ) payments for operating expenses (9,000 ) payments for income taxes (4,000 ) cash provided by operating activities 2,000.
the following information is obtained from the income statement of battery builders:
net income $4,000
depreciation expense 4,000
gain on sale of equipment 2,000
write-off of intangibles 1,000
in addition, the following information is obtained from the comparative balance sheets of battery builders (decreases in parentheses):
change in accounts receivable $3,000
change in inventory 3,000
change in accounts payable 2,000
change in accrued payable (related to operating expense) (2,000)
change in deferred income taxes payable 1,000
required:
1. prepare a complete accrual-basis income statement for the current year.
2. compute the cash flows from operations using the indirect approach (that is, start with accrual-basis net income and adjust for various items to obtain cash flows from operations).