Calculating cash from operations, LO 1, 3, 4) You are provided with the following balance sheet information and summarized income statement for Rivulet Inc.:'

All sales are credit sales, Accounts payable pertains exclusively to the purchase of inventory and accrued liabilities pertains exclusively to other expenses.

Required

a. Prepare Rivulet’s cash from operations section of the cash flow statement using the indirect method.

b. Calculate these amounts:
1. cash collected from customers ii. cash paid to suppliers of inventory ili. cash paid for other expenses Use this information to prepare Rivulet’s cash from operations section of the cash flow statement using the direct method.

c. Do you think the direct method or indirect method provides more useful information to stakeholders? Explain. What information is available when the direct method is used that isn’t available when the indirect method is used?

d. Explain the difference between net income and cash from operations. Why did Rivulet have a loss on its income statement but positive cash from operations?

e. What are the implications of having a loss on the income statement but positive cash from operations?

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Rivulet Inc. Current Operating Assets and Liabilities as of December 31, 2014 and 2015 2015 2014 2015 2014 Accounts receivable $310,000 $252,500 Inventory 687,500 787,500 Accounts payable $480,000 $542,500 Accrued liabilities 122,500 80,000 Rivulet Inc. Income Statement for the Year Ended December 31, 2015 Revenue $2,487,500 Cost of goods sold 1,330,000 Gross margin 1,157,500 Other expenses 980,000 Depreciation expense 537,500 Gain on sale of capital assets (62,500) Net loss (442,500)