Prepare the operating activities section of a Cash Flow statement using the indirect method:

Reading Readiness, Inc. has provided you its list of accounts and balances as of January 31. The Controller has asked you to prepare an Income Statement for the month ended January 31. Account balances were all zero on January 1. 2 B Account Name Debits Credits Cash 37,500 5 Accounts Receivable 28,600 5 Inventory 43,300 Prepaid Rent 2,000 3 Trucks 69,000 e Accumulated Dpreciation 20,700 0 Accounts Payable 8,800 1 Notes Payable 20,000 2 Common Stock 75,000 3 Retained Earnings 31,800 4 Sales Revenue 175,500 5 Sales Returns and Allowances 4,700 6 Sales Discounts 6,000 7 Cost of Goods Sold 67,700 8 Wages Expense 25,900 9 Rent Expense 24,000 0 Depreciation Expense 13,800 1 Interest Expense 1,600 2 Income Tax Expense 7,700 3 Totals $ 331,800 $ 331,800 4 5 Required: 6 1. Prepare a multistep income statement that would be used for internal reporting purposes: 7 Reading Readiness Inc 9 Income Statement 0 For the Year Ended December 31, 20x1 1 Sales 175,500 2 Less: 3 Sales Returns and Allowances (4,700) 4 Sales Discounts -6000 5 Net Sales 164,800 6 Less: Cost of Goods Sold (67,700) 7 Gross Profit 97,100 3 Expenses: 9 Wages Expense (25,900) Rent Expense (24,000) Wages Expense Rent Expense Depreciation Expense Income from Operations Less: Interest Expense Income Before Income Tax Expens Less: Income Tax Expense Net Income (25,900) (24,000) (13,800) 33,400 (1,600) 31,800 (7,700) 24,100 2. Prepare the operating activities section of a Cash Flow statement using the indirect method: Reading Readiness Inc Statement of Cash Flow For the Year Ended December 31, 20x1 Cash Flows from Operating Activities Net Income Adjustments to reconcile net Net cash provided by (used in)