Question

The following information is taken from the operating section of the statement of cash flows (direct method) of Battery Builders, Inc.: Collections from customers Payments to suppliers for purchases Payments for operating expenses Payments for income taxes Cash provided by operating activities $ 28,000 (13,000) (9,000) (4,000) 2,000 The following information is obtained from the income statement of Battery Builders: Net income Depreciation expense Gain on sale of equipment Write-off of intangibles $ 4,000 4,000 2,000 1,000 In addition, the following information is obtained from the comparative balance sheets of Battery Builders (decreases in parentheses): Change in accounts receivable Change in inventory Change in accounts payable Change in accrued payable (related to operating expense) Change in deferred taxes payable $ 3,000 3,000 2,000 (2,000) 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). Complete this question by entering your answers in the tabs below. Required Required 2 Prepare a complete accrual-basis income statement for the current year. (Net cash outflows and amounts to be deducted should be indicated by a minus sign.) Less:

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

31000 Answer Part 1) Income Statement Sales (28000+3000) Less: Cost of goods sold (13000+2000-3000) Operating expenses (9000-2000) Depreciation expense writte off intangible Gain on sale of equipment Income tax expenses (4000+1000) -12000 -7000 -4000 -1000 2000 -5000 4000) Net Income Notes Sales = increase in account receivable + cash collected = 3000+28000 = $ 31000 Cost of goods sold = cash paid for inventory + increase in account payable - increase in inventory = 13000+2000-3000 = 12000 Income taxes expense = cash paid for taxes + increase in deferred taxes payable =4000+1000 = $ 5000

4,000.00 Part 2) Cash Flow (Indirect Method) Net Income Adjustments Depreciation expense writte off intangible Gain on sale of equipment Increase in account receivable Increase in inventory Increase in account payable Decrease in accured expenses Increase in deferred taxes payable 4,000.00 1,000.00 -2,000.00 -3,000.00 -3,000.00 2,000.00 -2,000.00 1,000.00 Cnet cash Provided by operating activities 2,000.00 For any help please comment in the comment box Thank You