Exercise 11-11 Calculate operating activities-indirect method (LO11-2) Portions

Question

Exercise 11-11 Calculate operating activities-indirect method (LO11-2) Portions of the financial statements for Peach Computer are provided below PEACH COMPUTER Income Statement For the year ended December 31, 2018 Net sales Expenses $1,600,000 Cost of goods sold Operating expenses Depreciation expense Income tax expense $970,000 480,000 42,000 32,000 Total expenses 1,524,000 Net income s 76,000 PEACH COMPUTER Selected Balance Sheet Data December 31 Increase () or 2018 2017 Decrease (D) Cash Accounts receivable Inventory Prepaid rent Accounts payable Income tax payable $94,000 $81,000 $13,000 (1) 67,000 51,000 16,000 (1) 4,000 (1) 46,800 53,000 2,200 3,400 37,000 33,000 4,200 6,000 6,200 (D) 1,200 (D) 1,800 (D)

Explanation / Answer

Statement of cash flow (partial)

Cash flow from operating activities Net income 76000 Adjustments to reconcile net income to net cash flows from operating activities Depreciation expense 42000 Decrease account receivable 6200 Increase inventory -16000 Decrease prepaid rent 1200 Increase account payable 4000 Decrease income tax payable -1800 35600 Net cash flow from operating activities 111600

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