Question

Portions of the financial statements for Peach Computer are provided below. PEACH COMPUTER Income Statement For the year ended December 31, 2021 Net sales $2,050,000 Expenses: Coat of goods sold $1,150,000 Operating expenses 660,000 Depreciation expense 60,000 Income tax expense 50,000 Total expenses 1,920,000 Net income $ 130,000 PEACH COMPUTER Selected Balance Sheet Data December 31 Cash Accounts receivable Inventory Prepaid rent Accounts payable Income tax payable 2021 $112,000 46,000 85,000 4.000 55,000 6,000 2020 $90,000 54,000 60,000 7.000 42,000 15,000 Increase (1) Or Decrease (D) $22,000 (1) 8,000 (D) 25,000 (I) 3,000 (D) 13,000 (I) 9.000 (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.) 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 is complete but not entirely correct. PEACH COMPUTER Statement of Cash Flows (partial) For the Year Ended December 31, 2021 Cash flows from operating activities Depreciation expense 60,000 Increase in accounts receivable 8,000 Increase in prepaid rent 3.000® Increase in accounts payable 13,000 Increase in inventory (25,000) Decrease in income tax payable (9,000) Net cash flows from operating activities 50.000

Please explain.

Answer 1

1) cash receipt from customer = sale revenue+decrease in accounts receivable
cash receipt from customer = 2050000+8000 = 2058000
2) payment to suppliers = cost of goods sold-increase in accounts payable+increase in inventory
payment to suppliers = 1150000-13000+25000 = 1162000
3) payment for tax = income tax expenses+decrease in tax payable
payment for tax = 50000+9000 =59000
4) Operating expenses = operating expenses-decrease in prepaid rent
statement of cash flow (partial)
Cash flow from operating activities
cash receipt from customer				2058000
cash payment to suppliers				-1162000
cash payment for income tax				-59000
operating expense (660000-3000)				-657000
Net cash flow from operating activities				180000

Please give a thumbs up if it is helpful & let me know if any doubt