Portions of the financial statements for Myriad Products are provided below. MYRIAD PRODUCTS COMPANY Income Statement For the Year Ended December 31, 2018 ($ in millions) Sales $ 900 Cost of goods sold 315 Gross margin 585 Salaries expense $ 150 Depreciation expense 98 Patent amortization expense 5 Interest expense 38 Loss on sale of land 4 295 Income before taxes 290 Income tax expense 145 Net Income $ 145 MYRIAD PRODUCTS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) Year 2018 2017 Change Cash $ 138 $ 130 $ 8 Accounts receivable 261 277 (16 ) Inventory 465 480 (15 ) Accounts payable 203 194 9 Salaries payable 107 116 (9 ) Interest payable 57 50 7 Income taxes payable 48 40 8 Required: Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the indirect method.

Respuesta :

Answer:

Explanation:

The preparation of the Cash Flows from Operating Activities—Indirect Method is shown below:

Cash flow from Operating activities - Indirect method

Net income $145

Adjustment made:

Add : Depreciation expense $98

Add: Loss on sale of land $4

Add: Amortization expense $5

Less: Increase in cash balance -$8 ($138 - $130)

Add: Decrease in accounts receivable $16 ($261 - $277)

Add: Decrease in inventory $15 ($465 - $480)

Add: Increase in accounts payable $9 ($203 - $194)

Less: Decrease in salaries payable -$9 ($107 - $116)

Add: Increase in interest payable $7 ($57 - $50)

Add: Increase in income tax payable $8 ($48 - $40)

Total of Adjustments                                                           $145

Net Cash flow from Operating activities $290