The income statement and a schedule reconciling cash flows from operating activi

Question

The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Macrosoft Corporation MACROSOFT CORPORATION Income Statement For the Year Ended December 31, 2016 (S in millions) Revenues and gains Sales Gain on sale of cash equivalents Gain on sale of investments $326.00 2.80 24.80 353.60 Expenses and loss Cost of goods sold Salaries Interest expense Insurance Depreciation Patent amortization Loss on sale of land $128.00 40.80 12.80 20.80 10.80 4.80 6.80 224.80 128.80 64.40 Income before tax Income tax expense Net income $64.40 Reconciliation of Net Income to Net Cash Flows from Operating Activities (S in millions) Net income $ 64.40 Adjustments for noncash effects Depreciation expense Patent amortization expense Loss on sale of land Gain on sale of investment Decrease in accounts receivable Increase in inventory Increase in accounts payable Decrease in bond discount Increase in salaries payable Decrease in prepaid insurance Increase in income tax payable 10.80 4.80 6.80 (24.80) 6.80 (12.80) 18.80 1.80 6.80 4.80 10.80 Net cash flows from operating activities 99.00

Explanation / Answer

Workings:

MACROSOFT CORPORATION Statement of Cash Flows For the Year Ended December 31, 2016 ($ in millions) Cash Flows from Operating Activities: Cash receipts from customers 332.80 Cash receipts from sale of cash equivalents 2.80 Cash paid to suppliers for inventory purchases -122.00 Cash paid to employees for salaries -34.00 Cash paid for interest -11.00 Cash paid for insurance -16.00 Cash paid for income taxes -53.60 Net cash flows from operating activities 99.00

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