Question

Portions of the financial statements for Peach Computer are provided below. PEACH COMPUTER Income Statement For the year ended December 31, 2018 Net sales $1,650,000 Expenses: Cost of goods sold $990,000 Operating expenses 500,000 Depreciation expense 44,000 Income tax expense 34,000 Total expenses 1,568,000 Net income $ 82,000 PEACH COMPUTER Selected Balance Sheet Data December 31 2018 2017 Increase (I) or Decrease (D) Cash $96,000 $82,000 $14,000 (I) Accounts receivable 46,600 52,000 5,400 (D) Inventory 69,000 52,000 17,000 (I) Prepaid rent 2,400 3,800 1,400 (D) Accounts payable 39,000 34,000 5,000 (I) Income tax payable 4,400 7,000 2,600 (D) Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the direct method. (List cash outflows as negative amounts.)

Answer 1

Answer:

operating activities section

Cash Receipts from Customers                         $1,644,600

Cash Paid to Suppliers and Employees          ($1,500,600)

Cash Generated from Operations                        $164,000

Income taxes paid                                                 ($36,600)

Net Cash from Operating Activity                         $127,400

Explanation:

statement of cash flows for Peach Computer

operating activities section

Cash Receipts from Customers                         $1,644,600

Cash Paid to Suppliers and Employees          ($1,500,600)

Cash Generated from Operations                        $164,000

Income taxes paid                                                 ($36,600)

Net Cash from Operating Activity                         $127,400

Cash Receipts from Customers Calculation :

Net sales                                              $1,650,000

Less Increase In Account Receivable   ( $ 5,400)

Cash Receipts from Customers          $1,644,600

Cash Paid to Suppliers and Employees Calculation :

Cost of goods sold                                    $990,000

Add  Operating expenses                        $500,000

Increase in inventory                                    $17,000

Decrease in Prepaid rent                              ($1,400)

Increase in Accounts payable                     ($5,000)

Cash Paid to Suppliers and Employees  $1,500,600

Income tax expense Paid Calculation :

Income tax expense                            $34,000

Add Decrease in Income tax payable $2,600

Income tax expense Paid                   $36,600