Question

Exercise 11-11A Calculate operating activities-indirect method (LO11-3) Portions of the financial statements for Peach Computer are provided below. PEACH COMPUTER Income Statement For the year ended December 31, 2021 Net sales $1,950,000 Expenses: Cost of goods sold $1,110,000 Operating expenses 620,000 Depreciation expense 56,000 Income tax expense 46,000 Total expenses 1,832,000 Net income $ 118,000 PEACH COMPUTER Selected Balance Sheet Data December 31 Increase (I) Decrease (D) $20,000 Cash Accounts receivable Inventory Prepaid rent Accounts payable Income tax payable 2021 $188,888 45,600 81,000 3,680 51,000 5,680 2020 $88,888 52,000 58,eee 6,200 40,000 13,000 Eeeeeee 2,600 11,eee 7,480 Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the in outflows and any decrease in cash as negative amounts.) PEACH COMPUTER Statement of Cash Flows (partial) For the Year Ended December 31, 2021 Cash flows from operating activities:

Answer 1

Solution

Peach Computer

Statement of cash flows (Partial) Indirect Method:

Peach Computer
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2021
Cash flow from operating activities:
Net Income		$118,000
Adjustments to reconcile net income to net cash flow from operations:
Depreciation	$56,000
Decrease in accounts receivable	$6,400
Increase in inventory	($23,000)
Decrease in prepaid rent	$2,600
Increase in accounts payable	$11,000
Decrease in income tax payable	($7,400)	$45,600
Net cash flow from operating activities		$163,600