Question

The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in thousands) for Peach Computers. PEACH COMPUTERS Income Statement For the Year Ended December 31, 2021 Sales $ 305 Cost of goods sold (185 ) Gross margin 120 Salaries expense $ 41 Insurance expense 19 Depreciation expense 11 Loss on sale of land 5 76 Income before tax 44 Income tax expense (22 ) Net income $ 22 Reconciliation of Net Income To Net Cash Flows from Operating Activities Net income $ 22 Adjustments for Noncash Effects Depreciation expense 11 Loss on sale of land 5 Changes in operating assets and liabilities: Decrease in accounts receivable 6 Increase in inventory (13 ) Decrease in accounts payable (8 ) Increase in salaries payable 5 Decrease in prepaid insurance 9 Increase in income tax payable 20 Net cash flows from operating activities $ 57 Required: 1. Calculate each of the following amounts for Peach Computers. 2. Prepare the cash flows from operating activities section of the statement of cash flows (direct method).

Answer 1

Kindly check Explanation

Step-by-step explanation:

1.) Cash received from customers during the reporting period

(Sale + decrease in acc receivable)

($305 + $6) = $311

2.)Cash paid to suppliers of the goods

(COGS+ increase in inventory+ decrease in acc payable)

($185 + $13 + $8) = $206

3.) Cash paid to employees

(salary- increase in salary payable)

($41 - $5) =$36

4.) Cash paid for insurance

($19 - $9[decrease in prepaid insurance) = $10

5.)Cash paid for income tax

($22 - $20[Increase in income tax payable]) = $2

B.) Cash received from customers during the reporting period - - - - - - - - $311

Cash paid to suppliers of the goods - -($206)

Cash paid to employees - - - - - - - - - - - ($36)

Cash paid for insurance - - - - - - - - - - - - ($10)

Cash paid for income tax - - - - - - - - - - - - ($2)

Cash flow from operating activities - - - - $57