The following cash flow information pertains to the 2008 operations of Divemaster, Inc., a maker of scuba diving equipment:

The following additional information comes from Divemaster’s 2008 income statement:

The following additional information comes from Divemaster’s 2007 and 2008 comparative balance sheets (decreases are in parentheses):

Required:
1. Use the preceding information to derive Divemaster’s 2008 income statement.
2. Use the same information to compute Divemaster’s 2008 cash flow from operating activities under the indirect method (that is, derive cash flow from operating activities by making the necessary adjustments to net income).
3. Provide a brief explanation for the difference observed between net income and cash provided by operating activities.

Transcribed Image Text:

Cash collections from customers $72,481 Cash payments to suppliers 51,768 Cash payments for selling and administrative expenses 9,409 Cash payments for interest 1,344 Cash payments for current income taxes 671 Cash provided by operating activities 9,289