Question

PEACH COMPUTER

Income Statement
For the year ended December 31, 2021

Net sales $ 1,700,000
Expenses:
Cost of goods sold $ 1,010,000
Operating expenses 520,000
Depreciation expense 46,000
Income tax expense 36,000
Total expenses 1,612,000
Net income $ 88,000

PEACH COMPUTER
Selected Balance Sheet Data
December 31
Increase (I)
or
2021 2020 Decrease (D)
Cash $ 98,000 $ 83,000 $ 15,000 (I)
Accounts receivable 46,400 51,000 4,600 (D)
Inventory 71,000 53,000 18,000 (I)
Prepaid rent 2,600 4,200 1,600 (D)
Accounts payable 41,000 35,000 6,000 (I)
Income tax payable 4,600 8,000 3,400 (D)

Required:
Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

$121,600

Step-by-step explanation:

The preparation of the Cash Flows from Operating Activities - Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $88,000

Add : Depreciation expense $46,000

Add: Decrease in accounts receivable $4,600

Less: Increase in inventory -$18,000

Add: Decrease in prepaid rent -$1,600

Add: Increase in accounts payable $6,000

Less: Decrease in income tax payable -$3,400

Net Cash flow from Operating activities $121,600

The cash outflow represents in minus sign while the cash inflow presents in a positive sign