Problem 4-8 Understanding the relation between operating cash flows and accrual earnings (L04-5, 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 (2,080) (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). ok Complete this question by entering your answers in the tabs below. int Required 1 Required 2 erences Prepare a complete accrual-basis income statement for the current year. (Amounts to be deducted should be indicated by a minus sign.). $ 31,000 Sales Less Cost of goods sold Operating expenses Depreciation expenses Income tax expense (12,000) (7.000) (4,000) Net Income 8,000 (Required Required 2 > Required 1 Required 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). (Net cash outflows and amounts to be deducted should be indicated by a minus sign.) Net income Plus/minus adjustments: Depreciation Increase in inventory Increase in accounts payable Decrease in accrued payables Cash flows from operating activities $ 0