The income statement for Midd Inc a publicly traded company following IFRS is pr
ID: 2497637 • Letter: T
Question
The income statement for Midd Inc a publicly traded company following IFRS is presented here
Midd Inc
Income statement
Year end December 31, 2014
Sales $6,800,000
Cost of Good Sold $3,250,000
Gross Profit $3,550,000
Operating Expenses $1,500,000
Profit from Operations $2,050,000
Interest Expense $150,000
Profit before Income Taxes $1,900,000
Income Taxes $400,000
Profit $1,500,000
Additional information
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
Question
Prepare the operating activities section of the statement of cash flows using the Direct method. CANNOT USE INDIRECT METHOD
Explanation / Answer
Cash flow from operating activities
Cash received from suppliers = $6,800,000 +110,000 = $6,910,000
Cash paid to suppliers = $3,250,000 +45,000 +101,000 = $3,396,000
Cash paid for operating expenses = $1,500,000 - $58,000 - $75,000 + 65,000 - $22,000 = $1,410,000
Cash paid for interest = 150,000 + 14,000 = $164,000
Income tax paid = 400,000 - 35,000 = $365,000
Cash received from customers $6,910,000 Cash paid to suppliers $3,396,000 Cash paid for operating expense $1,410,000 Cash paid for interest $ 164,000 Cash paid for income tax $ 365,000 Net cash $1,575,000Related Questions
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