The income statement and other selected data for Frish Company follow:
FRISH COMPANY
Income Statement
For Year Ended December 31, 2009
Net sales .............................$640,000
Expenses:
Cost of goods sold ...........................360,000
Selling and administrative expense ...................43,000
Other expense ..............................2,000
Total expenses ............................405,000
Income before income tax ......................235,000
Income tax .............................92,000
Net income ............................$143,000
Other data:
a. Cost of goods sold, including depreciation expense of $15,000
b. Selling and administrative expense, including depreciation expense of $5,000
c. Other expense, representing amortization of patent, $3,000, and amortization of bond premium, $1,000
d. Increase in accounts receivable ....................$27,000
e. Increase in accounts payable .......................15,000
f. Increase in inventories ........................35,000
g. Decrease in prepaid expenses .......................1,000
h. Increase in accrued liabilities .....................3,000
i. Decrease in income taxes payable ...................10,000
Required
a. Prepare a schedule of change from accrual basis to cash basis income statement.
b. Using the schedule of change from accrual basis to cash basis income statement computed in (a), present the cash provided by operations, using (1) the direct approach and (2) the indirect approach.