Portions of the financial statements for Peach Computer are provided below. PEAC
ID: 2489941 • Letter: P
Question
Portions of the financial statements for Peach Computer are provided below. PEACH COMPUTER Income Statement For the year ended December 31, 2015 Net sales $2,000,000 Expenses: Cost of goods sold $1,130,000 Operating expenses 640,000 Depreciation expense 58,000 Income tax expense 48,000 Total expenses 1,876,000 Net income $ 124,000 PEACH COMPUTER Selected Balance Sheet Data December 31 2015 2014 Increase (I) or Decrease (D) Cash $110,000 $89,000 $21,000 (I) Accounts receivable 45,800 53,000 7,200 (D) Inventory 83,000 59,000 24,000 (I) Prepaid rent 3,800 6,600 2,800 (D) Accounts payable 53,000 41,000 12,000 (I) Income tax payable 5,800 14,000 8,200 (D) Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)
Explanation / Answer
Solution EBIT 172000 ADD: DEPRICIATION 58000 LESS:INCOME TAX -48000 LESS:INCREASE IN ACCOUNTS RECEIVABLE -7200 ADD:DECREASE IN INVENTORY 24000 LESS:INCREASE IN PREPAID RENT -2800 LESS: DECREASE IN ACCOUNTS PAYBLE -12000 184000 NOTES :IT IS ASSUMED THAT INCOME TAX PAYABLE ADJUSTMENT ALREADY DONE, SO ONLY PAYMENT IS ONLY DEDUCTED.