Cash flows from operating activities for both the indirect and direct methods are presented for Audio Systems.Cash Flows from Operating ActivitiesNet income$45,000 ?Adjustments to reconcile net income to net cash flows from operating activities:?? Depreciation expense7,000 ? Decrease in accounts receivable9,000 ? Increase in accounts payable4,000 ? Decrease in income tax payable(6,000)? Net cash flows from operating activities?$59,000Cash Flows from Operating Activities Cash received from customers$93,000 ? Cash paid for operating expenses(22,000)? Cash paid for income taxes(12,000)? Net cash flows from operating activities?$59,000Required:Complete the following income statement for Audio Systems. Assume
all accounts payable are for operating expenses.Audio SystemsIncome StatementFor the Year Ended December 31, 2021Revenues?$? Expenses:?? Operating expenses? ? Depreciation expense7,000 ? Income tax expense ? ? Total expenses?? Net Income?$45,000 Hint: Use the following calculations and work backwards from bottom to top for each item.Revenues?± Change in accounts receivable?= Cash received from customers?Operating expenses?± Change in accounts payable?= Cash paid for operating expenses?Income tax expense?± Change in income tax payable?= Cash paid for income taxes?
What will be an ideal response?
| Audio Systems |
| Income Statement |
| For the Year Ended December 31, 2021 |
| Revenues | ? | $84,000 |
| Expenses: | ? | ? |
| Operating expenses | $26,000 | ? |
| Depreciation expense | 7,000 | ? |
| Income tax expense | 6,000 | ? |
| Total expenses | ? | 39,000 |
| Net Income | ? | $45,000 |
| Revenues | $84,000 |
| + Decrease in accounts receivable | 9,000 |
| = Cash received from customers | $93,000 |
| Operating expenses | $26,000 |
| - Increase in accounts payable | (4,000) |
| = Cash paid for operating expenses | $22,000 |
| Income tax expense | $6,000 |
| + Decrease in income tax payable | 6,000 |
| = Cash paid for income taxes | $12,000 |
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