The income statement and the cash flows from the operating activities section of
ID: 2532232 • Letter: T
Question
The income statement and the cash flows from the operating activities section of the statement of cash flows are provided below for Syntric Company. The merchandise inventory account balance neither increased nor decreased during the reporting period. Syntric had no liability for insurance, deferred income taxes, or interest at any time during the period.
Required:
Prepare a schedule to reconcile net income to net cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands rounded to 1 decimal place (i.e., 5,500 should be entered as 5.5).)
Income Statement
For the Year Ended December 31, 2018
($ in 000s) Sales $ 280.2 Cost of goods sold (175.4 ) Gross margin 104.8 Salaries expense $ 38.6 Insurance expense 17.5 Depreciation expense 5.5 Depletion expense 4.2 Bond interest expense 11.1 (76.9 ) Gains and losses: Gain on sale of equipment 22.0 Loss on sale of land (6.7 ) Income before tax 43.2 Income tax expense (21.6 ) Net income $ 21.6 Cash Flows from Operating Activities: Cash received from customers $ 240.0 Cash paid to suppliers (164.0 ) Cash paid to employees (35.0 ) Cash paid for interest (9.8 ) Cash paid for insurance (13.7 ) Cash paid for income taxes (11.2 ) Net cash flows from operating activities $ 6.3
Explanation / Answer
Reconciliation Statement For net Income & Cash Flow from Operating Activities Net Income 21.60 Add/(Less) non cash effects on operating activities Depreciation expense 5.50 Depletion Expense 4.20 Gain on Sale of Equipment (22.00) Loss on sale of Land 6.70 Increase in Accounts Receivables ($280.20 - $240) (40.20) Increase in Insurance Payable ($17.50 - $13.70) 3.80 Increase in Income Tax Payable ($21.60 - $11.20) 10.40 Increase in Interest Payable ($11.10 - $9.80) 1.30 Increase in Salaries Payable (($38.60 - $35) 3.60 Increase in Accounts Payable ($175.40 - $164) 11.40 (15.30) Net Cash provided by operating activities 6.30
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