Portions of the financial statements for Myriad Products are provided below. Req
ID: 2528909 • Letter: P
Question
Portions of the financial statements for Myriad Products are provided below.
Required:
Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Income Statement
For the Year Ended December 31, 2018
($ in millions) Sales $ 700 Cost of goods sold 245 Gross margin 455 Salaries expense $ 100 Depreciation expense 78 Patent amortization expense 5 Interest expense 18 Loss on sale of land 4 205 Income before taxes 250 Income tax expense 125 Net Income $ 125
Explanation / Answer
Cash collection from receivables = sales+ decrease in receivables
700+17
717
payment to suppliers = Cost of goods sold -Decrease in inventory- increase in payables
= 245-15-11
= 219
salary paid = salary expense + decrease in salary payable
100+11
111
Interest paid =interest expense - increase in interest payable
18 -10 = 8
Income tax payable = income tax expense -increase in income tax payable
125- 10
115
Cash flow statement
for the year ended 31 dec 2018
Cash flow statement
for the year ended 31 dec 2018
cash flow from operating activity (Direct) Collection from receivable 717 less: Payment to suppliers (219) salary paid (111) Interest paid (8) Income tax paid (115) Net cash flow from operating activity 264