The income statement and a schedule reconciling cash flows from operating activi
ID: 2482782 • Letter: T
Question
The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in millions) for Mike Roe Computers. MIKE ROE COMPUTERS Income Statement For the Year Ended December 31, 2013 Sales $ 148.60 Cost of goods sold (89.30) Gross margin 59.30 Salaries expense $ 18.60 Insurance expense 10.60 Depreciation expense 4.30 Interest expense 5.30 (38.80) Gains and losses: Gain on sale of equipment 10.60 Loss on sale of land (1.60) Income before tax 29.50 Income tax expense (14.75) Net income $ 14.75 Reconciliation of Net Income to Net Cash Flows from Operating Activities Net income $ 14.75 Adjustments for noncash effects: Decrease in accounts receivable 4.30 Gain on sale of equipment (10.60) Increase in inventory (5.30) Increase in accounts payable 8.30 Increase in salaries payable 2.30 Depreciation expense 4.30 Decrease in bond discount 2.65 Decrease in prepaid insurance 1.30 Loss on sale of land 1.60 Increase in income tax payable 5.30 Net cash flows from operating activities $ 28.90 Required: 1. Calculate each of the following amounts for Mike Roe Computers: (Enter your answers in millions of dollars rounded to 2 decimal places.) 2. Prepare the cash flows from operating activities section of the statement of cash flows (direct method). (Enter your answers in millions of dollars rounded to 2 decimal places. Amounts to be deducted should be indicated with a minus sign.)
Explanation / Answer
Working Notes:
Cash flow from operating activities $ Cash receipt from customers 152900000 Less: Cash Payment to suppliers -86300000 Cash payment to employees -16300000 Cash payment for insurance -9300000 Interest payments -2650000 Income Tax payments -9450000 Net Cash Flow from Operating activities 28900000Related Questions
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