Question

Portions of the financial statements for Peach Computer are provided below. Book PEACH COMPUTER Income Statement For the year ended December 31, 2021 Net sales $1,875,000 Bxpenses Cost of goods 1.080,000 bold Operating 590,000 expenses Depreciation 53,000 expense Income tax 43,000 expense Total expenses eferences PEACH COMPUTER Selected Balance sheet Data December Recount Eeeeeee 2020 Degree $105,000 586,500 $13,500 TL 5,300 50, 5005 , 2002 76,000 56,500 21,500 IT 2005 ,600 2.300 400036500 300 2000 Prepare the operating activities section statement of cash flows for Peach Computer using the indirecte List cash outlows and any decrease in cash as negative amounts.) d PEACH COMPUTER Statement of Cash Flows partial) For the Year Ended December 31, 2021 cash flows from operating A stments 10 recond.no income to cash fows from operancaccio

Answer 1

Answer:

PEACH COMPUTER
Statement of Cash Flows (partial)
For the Year Ended December 31,2021
Cash flows from operating activities:
Net income	$ 109,000
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation expense	$    53,000
Changes in Operating assets and liabilities:
Decrease in accounts receivable	$      5,200
Increase in Inventory	$ (21,500)
Decrease in prepaid rent	$      2,300
Increase in Accounts Payable	$      9,500
Decrease in Income tax payable	$    (6,200)
Net cash flows from operating activities		$ 151,300

Explanations:

Depreciation expense is a non-cash item. So that it was added to net income.

Increase in operating assets and Decrease in operating liabilities should be deduct from net income. like that, Decrease in operating assets and Increase in Operating liabilities should be added.