Portions of the financial statements for Peach Computer are provided below. PEACH COMPUTERIncome StatementFor the year ended December 31, 2021Net sales $ 1,875,000 Expenses: Cost of goods sold $ 1,080,000 Operating expenses 590,000 Depreciation expense 53,000 Income tax expense 43,000 Total expens 1,766,000 Net income $ 109,000 PEACH COMPUTERSelected Balance Sheet DataDecember 312021 2020 Increase (I)orDecrease (D)Cash $ 105,000 $ 86,500 $ 18,500 (I)Accounts receivable 45,300 50,500 5,200 (D)Inventory 78,000 56,500 21,500 (I)Prepaid rent 3,300 5,600 2,300 (D)Accounts payable 48,000 38,500 9,500 (I)Income tax payable 5,300 11,500 6,200 (D)Required:Prepare the operating activities section of the statement of cash flows for Peach Computer using the direct method. (List cash outflows and any decrease in cash as negative amounts.)

Cash flow from Operating Activities

Cash Receipts from Customers                   $1,880,200

Cash Paid to Suppliers and Employees     ($1,679,700)

Cash Generated from Operations                $ 200,500

Income taxes paid                                           ($49,200)

Cash flow from Operating Activities              $ 151,300

Explanation:

Cash Receipts from Customers Calculation

Net sales                                                    $ 1,875,000

Add Decrease in Accounts receivable          $ 5,200

Cash Receipts from Customers                $1,880,200

Cash Paid to Suppliers and Employees

Cost of goods sold                                   $ 1,080,000

Add Operating Expenses

Operating expenses                                   $ 590,000

                                                                    $1,670,000

Increase in Inventory                                      $ 21,500

Decrease in Prepaid rent                               ($ 2,300)

Increase in Accounts payable                       ($ 9,500)

Cash Paid to Suppliers and Employees    $1,679,700

Income taxes paid Calculation

Open an Income taxes Payable T - Account as follows :

Debits :

Closing Balance                                 $ 5,300

Cash (Balancing figure)                    $49,200

Totals                                                 $54,500

Credit :

Opening Balance                              $ 11,500

Income Statement                            $43,000

Totals                                                 $54,500

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