Question

Portions of the financial statements for Peach Computer are provided below.PEACH COMPUTERIncome StatementFor the year ended December 31, 2021Net sales $ 1,875,000 Expenses: Cost of goods sold $ 1,080,000 Operating expenses 590,000 Depreciation expense 53,000 Income tax expense 43,000 Total expens 1,766,000 Net income $ 109,000 PEACH COMPUTERSelected Balance Sheet DataDecember 312021 2020 Increase (I)orDecrease (D)Cash $ 105,000 $ 86,500 $ 18,500 (I)Accounts receivable 45,300 50,500 5,200 (D)Inventory 78,000 56,500 21,500 (I)Prepaid rent 3,300 5,600 2,300 (D)Accounts payable 48,000 38,500 9,500 (I)Income tax payable 5,300 11,500 6,200 (D)Required:Prepare the operating activities section of the statement of cash flows for Peach Computer using the direct method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

Cash flow from Operating Activities

Cash Receipts from Customers $1,880,200

Cash Paid to Suppliers and Employees ($1,679,700)

Cash Generated from Operations $ 200,500

Income taxes paid ($49,200)

Cash flow from Operating Activities $ 151,300

Step-by-step explanation:

Cash Receipts from Customers Calculation

Net sales $ 1,875,000

Add Decrease in Accounts receivable $ 5,200

Cash Receipts from Customers $1,880,200

Cash Paid to Suppliers and Employees

Cost of goods sold $ 1,080,000

Add Operating Expenses

Operating expenses $ 590,000

$1,670,000

Increase in Inventory $ 21,500

Decrease in Prepaid rent ($ 2,300)

Increase in Accounts payable ($ 9,500)

Cash Paid to Suppliers and Employees $1,679,700

Income taxes paid Calculation

Open an Income taxes Payable T - Account as follows :

Debits :

Closing Balance $ 5,300

Cash (Balancing figure) $49,200

Totals $54,500

Credit :

Opening Balance $ 11,500

Income Statement $43,000

Totals $54,500