E 21-21 Cash flows from operating activities (direct method) derived from an income statement and cash flows from operating activities indirect method) LO21-3, LO21-4 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, 2016 Sales Cost of goods sold Gross margin Salaries expense Insurance expense Depreciation expense Loss on sale of land Income before tax Income tax expense Net income $305 185 120 $ 41 19 11 5 76 44 22 $22 Reconcillation of Net Income To Net Cash Flows from Operating Activities Net income Adjustments for Noncash Effects Depreciation expense Loss on sale of land Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Acc 3033 Chapter 20 Lecture Notes $22 11 5 6 (13) (8) Page 11