Problem 4-8 Understanding the relation between operating cash flows and accrual earnings (LO4-5, LO4-6, LO4-8) The following is the operating section of the statement of cash flows (direct method) of Battery Builders, Inc.: Collections from customers Payments to suppliers for inventory purchases Payments for operating expenses Payments for income taxes Cash provided by operating activities $ 28,000 (13,000) (9,000) (2,260) 3,740 The following information is obtained from the income statement of Battery Builders: Net income Depreciation expense $6,740 4,000 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 payables (related to operating expense) Change in income 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).