Portions of the financial statements for Clear Transmissions Company are provide
ID: 2532236 • Letter: P
Question
Portions of the financial statements for Clear Transmissions Company are provided below.
Required:
Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the indirect method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)
Income Statement
For the Year Ended December 31, 2018 ($ in 000s) Sales $ 2,280 Cost of goods sold 912 Gross margin 1,368 Salaries expense $ 412 Depreciation expense 260 Patent amortization expense 42 Interest expense 104 Loss on sale of cash equivalents 22 840 Income before taxes 528 Income tax expense 264 Net Income $ 264
Explanation / Answer
SOLUTION
Cash flows from operating activities-
Amount ($) Cash Flows from Operating Activities: Net income 264 Adjustments for non cash effects: Depreciation expense 260 Patent amortization expense 42 Changes in operating assets and liabilities: Decrease in accounts receivable 17 Decrease in inventory 16 Increase in accounts payable 10 Decrease in salaries payable (10) Increase in interest payable 8 Increase in income tax payable 9 Net cash flows from operating activities 616