In: Accounting
The income statement and a schedule reconciling cash flows from
operating activities to net income are provided below ($ in 000s)
for Peach Computers.
PEACH COMPUTERS Income Statement For the Year Ended December 31, 2018 |
|||||||
Sales | $ | 575.0 | |||||
Cost of goods sold | (230.0 | ) | |||||
Gross margin | 345.0 | ||||||
Salaries expense | $ | 69.0 | |||||
Insurance expense | 46.0 | ||||||
Depreciation expense | 22.0 | ||||||
Loss on sale of land | 20.0 | 157.0 | |||||
Income before tax | 188.0 | ||||||
Income tax expense | (94.0 | ) | |||||
Net income | $ | 94.0 | |||||
Reconciliation of Net Income To Net Cash Flows from Operating Activities |
|||
Net income | $ | 94.0 | |
Adjustments for Noncash Effects | |||
Depreciation expense | 22.0 | ||
Loss on sale of land | 20.0 | ||
Changes in operating assets and liabilities: | |||
Decrease in accounts receivable | 24.0 | ||
Increase in inventory | (103.0 | ) | |
Decrease in accounts payable | (62.0 | ) | |
Increase in salaries payable | 41.0 | ||
Decrease in prepaid insurance | 18.0 | ||
Increase in income tax payable | 88.4 | ||
Net cash flows from operating activities | $ | 142.4 | |
Required:
1. Calculate each of the following amounts for
Peach Computers:
2. Prepare the cash flows from operating
activities section of the statement of cash flows (direct
method).