Consider the following transactions pertaining to Retail Traders Company. Amounts in parentheses indicate a decrease in the account.

	Assets	=	Liabilities	+	Owners Equity
Explanation	Cash	Inventory	Accounts Payable	Common Stock	Retained Earnings
Beginning Balance		$10,000	$ 5,000	$3,000	$ 2,000
Credit purchases		100,000	100,000
Cash sales	$115,000				115,000
Cost of goods sold		(90,000)			(90,000)
Cash paid to supporters	(85,000)		(85,000)
Ending balance	$30,000	$20,000	$20,000	$3,000	$27,000

Required:

1. Prepare an income statement
2. Prepare a direct method cash flow statement
3. Prepare an indirect method cash flow statement
4. Provide an intuitive explanation of how the adjustments made to net income in the indirect method cash flow statement convert the accrual numbers to cash flow numbers.