The income statement for Middle Horn Inc a publicly traded company following IFR

Question

The income statement for Middle Horn Inc a publicly traded company following IFRS, is presented here: Operating expenses include $58,000 of depreciation expense and a $75,000 impairment loss on property, plant and equipment. Accounts Receivable decreased by $110,000 Merchandise Inventory increased by $45,000 Prepaid expenses related to operating expenses increased by $65,000 Accounts Payable to suppliers of merchandise decreased by $101,000 Accrued liabilities related to operating expenses increased by $22,000 Interest Payable decreased by $14,000 Income tax payable increased by $35,000 Prepare the operating activities section of the statement of cash flows using the Direct Method (no marks will be awarded if the Indirect Method is used)

Explanation / Answer

cash flow from operating activity (direct method) collection from receivables 6800000+110000 6910000 less: Payment to suppliers [3250000COGS -45000 increase in inventory -101000 decrease in payables] -3104000 payment of operating expense [1500000 -58000depreciation -75000property loss - 65000 increase in prepaid expense + 22000 increase in accrued liabilities] - 1324000 payment of interest 150000-14000 - 136000 Payment of taxes 400000+35000 -435000 cash flow from operating activity 1911000

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