Consider the following transactions pertaining to Retail Traders Company. Amounts in paren- theses indicate a decrease in the account.

Assets = Liabilities + Owners Equity

explanation	cash	inventory	acc payable	common stock	retained earnings
beg balance		10,000	5,000	3,000	2,000
credit purchases		100,000	100,000
cash sales	115,000				115,000
COGS		(90,000)			(90,000)
cash paid to suppliers	(85,000)		(85,000)
End balance	30,000	20,000	20,000	3,000	27,000

Required:

1. Based on this information, prepare an income statement and statement of cash flows. 2. Provide an intuitive explanation of how the adjustments made to net income in the cash vert the accrual numbers to cash flow numbers.

Source: P4-4 Preparing the income statement and statement of cash flows (LO 4-5, LO 4-8)