E 21-23 Cash flows from operating activities (direct method) Portions of the fin
ID: 2431223 • Letter: E
Question
E 21-23 Cash flows from operating activities (direct method) 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) LO21-3 Sales Cost of goods sold $660 250 410 Gross margin Salaries expense Depreciation expense Patent amortization expense Interest expense Loss on sale of land Income before taxes $110 90 5 20 3 228 182 91 $ 91 Income tax expense Net Income MYRIAD PRODUCTS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) Year 2018 2017 Change Cash Accounts receivable Inventory Accounts payable Salaries payable Interest payable Income taxes payable $102 220 440 140 80 25 15 $100 232 450 134 86 20 10 (12) (10) 6 5 5 Required: Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Com pany using the direct method.Explanation / Answer
Net cash flows from operating activities = $221
Explanation;
1. Cash receipts from customers;
Net sales
$660
+ Beginning Accounts Receivable
$232
- Ending Accounts Receivable
($220)
Total cash received from customers
$672
2. Cash Payments to Suppliers;
Cost of goods sold
$250
+ Beginning Accounts Payable
$134
- Ending Accounts Payable
($140)
+ Ending Inventory
$440
- Beginning Inventory
($450)
Total cash paid to suppliers
($234)
3. Cash Payments to Employees;
Salaries expense
$110
+ Beginning Salaries Payable
$86
- Ending Salaries Payable
($80)
Total cash paid to employees
($116)
4. Interest Payments;
Interest expense
$20
+ Beginning Interest Payable
$20
- Ending Interest Payable
($25)
Total cash paid for interest
($15)
5. Income Tax Payments;
Income tax expense
$91
+ Beginning Income Tax Payable
$10
- Ending Income Tax Payable
($15)
Total cash paid for income tax
($86)
Net cash flows from operating activities
$221
1. Cash receipts from customers;
Net sales
$660
+ Beginning Accounts Receivable
$232
- Ending Accounts Receivable
($220)
Total cash received from customers
$672
2. Cash Payments to Suppliers;
Cost of goods sold
$250
+ Beginning Accounts Payable
$134
- Ending Accounts Payable
($140)
+ Ending Inventory
$440
- Beginning Inventory
($450)
Total cash paid to suppliers
($234)
3. Cash Payments to Employees;
Salaries expense
$110
+ Beginning Salaries Payable
$86
- Ending Salaries Payable
($80)
Total cash paid to employees
($116)
4. Interest Payments;
Interest expense
$20
+ Beginning Interest Payable
$20
- Ending Interest Payable
($25)
Total cash paid for interest
($15)
5. Income Tax Payments;
Income tax expense
$91
+ Beginning Income Tax Payable
$10
- Ending Income Tax Payable
($15)
Total cash paid for income tax
($86)
Net cash flows from operating activities
$221
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.