Question

The following information is taken from the operating section of the statement of cash flows (direct...

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 taxes payable 1,000 Required: Prepare a complete accrual-basis income statement for the current year. 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).

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Answer #1

The income statement is shown below:

The above results are found using the following excel formulas:

The cash flows from operations is shown below:

The above results are found using the following excel formulas:

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