BTB Electronics Inc. manufactures parts, components, and processing equipment for electronics and semiconductor applications in the communications, computer, automotive, and appliance industries. Its sales tend to vary with changes in the business cycle because the sales of most of its customers are cyclical. Exhibit 3.30 presents balance sheets for BTB as of December 31, Year 7 through Year 9, and Exhibit 3.31 presents income statements for Year 8 and Year 9.

REQUIRED
a. Prepare a worksheet for the preparation of a statement of cash flows for BTB Electronics Inc. for Years 8 and 9. Follow the format of Exhibits 3.12 and 3.13 in the text. Notes to the firm€™s financial statements reveal the following (amounts in thousands):
(1) Depreciation expense was $641 in Year 8 and $625 in Year 9. No fixed assets were sold during these years.
(2) Other Assets represents patents. Patent amortization was $25 in Year 8 and $40 in Year 9. BTB sold a patent during Year 9 at no gain or loss.
(3) Changes in Deferred Income Taxes are operating activities.
b. Discuss the relations among net income and cash flow from operations and the pattern of cash flows from operating, investing, and financing activities.

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Exhibit 3.30 BTB Electronics Inc. Balance Sheets (amounts in thousands) (Problem 3.30) December 31: Year 9 Year 8 Year 7 ASSETS $ 367 $ 475 Cash 430 Accounts receivable 3,768 2,545 3,936 Inventories 2,094 2,966 2,334 Prepayments 122 270 116 $ 5,128 $ 7,647 $ 6,648 Total Current Assets Property, plant, and equipment, net 4,027 4,598 3,806 Other assets 456 559 193 $ 9,611 Total Assets $12,804 $10,647 Exhibit 3.30 (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY $ 796 $ 1,578 Accounts payable Notes payable to banks 809 2,413 231 11 Other current liabilities 695 777 1,076 $ 2,665 $ 3,904 $ 1,817 4,692 Total Current Liabilities Long-term debt Deferred income taxes 2,084 2,353 113 89 126 $ 6,101 $ 289 $ 6,598 $ 289 Total Liabilities $ 5,144 Preferred stock Common stock 85 85 83 Additional paid-in capital Retained earnings Total Shareholders' Equity 4,392 1,440 4,395 4,385 (1,259) 1,035 $ 3,510 $ 9,611 $ 6,206 $12,804 $ 5,503 Total Liabilities and Shareholders' Equity $10,647