Portions of the financial statements for peach computer are provided below. peach computer income statement for the year ended december 31, 2015net sales $2,050,000expenses: cost of goods sold $1,150,000operating expenses 660,000depreciation expense 60,000income tax expense 50,000total expenses 1,920,000net income $ 130,000peach computer selected balance sheet data december 31 2015 2014 increase (i) or decrease (d) cash $112,000 $90,000 $22,000 (i)accounts receivable 46,000 54,000 8,000 (d)inventory 85,000 60,000 25,000 (i)prepaid rent 4,000 7,000 3,000 (d)accounts payable 55,000 42,000 13,000 (i)income tax payable 6,000 15,000 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 as negative amounts.)

See below.

Explanation:

Cash flow from operating activities is as follows:

Net income                                                                 $130,000

Add: Depreciation                                                      $60,000

Less: Increase in receivables                                -   ($8,000)

Add: Decrease in inventory                                        $25,000

Less: Prepaid rent increase                                   -   ($3,000)

Less: Decrease in payable                                     -    ($13,000)

Add: Increase in tax payable                                       $9,000

Net effect on CF from Operating activities                 $+200,000

This effect is added to the opening cash balance along with net effects from Investing and Financing activities to arrive at the closing cash balance.

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