Exercise 7-6 Effect of warranties on income and cash flow LO 7-4 To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Deloch purchased the stereo systems for $140,000 and sold them for $250,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 2 percent of sales. During the year, she paid $2,820 cash to replace a defective tuner. Required a-1. Prepare an income statement for Deloch's first year of operation a-2. Prepare a statement of cash flows for Deloch's first year of operation. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Prepare a statement of cash flows for Deloch's first year of operation. (Amounts to be deducted should be indicated with a minus sign.) DELOCH STEREOS Statement of Cash Flows Cash flows from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Complete this question by entering your answers in the tabs below. Required A1 Required A2 Prepare a statement of cash flows for Deloch's first year of operation. (Amounts to be deducted should be indicated with a minus sign.) DELOCH STEREOS Statement of Cash Flows Cash flows from operating activities $ 0 Net cash flow from operating activities Cash flows from Investing activities Cash flows from financing activities Not change in cash 0 $ 0 Ending cash balance