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 $1,675,000 Expenses: Cost of goods sold $1,000,000 Operating expenses 510,000 Depreciation expense 45,000 Income tax expense 35,000 Total expenses 1,590,000 Net income $ 85,000 PEACH COMPUTER Selected Balance Sheet Data December 31 2018 2017 Increase (I) or Decrease (D) Cash $97,000 $82,500 $14,500 (I) Accounts receivable 46,500 51,500 5,000 (D) Inventory 70,000 52,500 17,500 (I) Prepaid rent 2,500 4,000 1,500 (D) Accounts payable 40,000 34,500 5,500 (I) Income tax payable 4,500 7,500 3,000 (D) Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method

Answer 1

	Statement of Cash Flows
	For the Year Ended December 31, 2018
Cash Flows from Operating Activities:
Net income		85000
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	45000
Decrease in Accounts receivable	5000
Increase in inventory	-17500
Decrease in Prepaid rent	1500
Increase in accounts payable	5500
Decrease in Income tax payable	-3000
		36500
Net cash provided by operating activities		121500