Exercise 21-26 Cash flows from operating activities (indirect method) sale of ca

Question

Exercise 21-26 Cash flows from operating activities (indirect method) sale of cash equivalent [LO21-4] Portions of the financial statements for Clear Transmissions Company are provided below CLEAR TRANSMISSIONS COMPANY Income Statement For the Year Ended December 31, 2016 (S in 000s) Sales Cost of goods sold $1,320 500 Gross margin Salaries expense Depreciation expense Patent amortization expense Interest expense Loss on sale of cash equivalents 820 $220 180 10 40 6 456 Income before taxes Income tax expense 364 182 Net Income $ 182 CLEAR TRANSMISSIONS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2016 and 2015 (S in 000s) 2016 2015 Change $102 $100 $ 2 Cash Accounts receivable Inventory Accounts payable Salaries payable Interest payable Income taxes payable 220 232 12) 40 450 (10) 140 134 6 80 25 15 86 20 10

Explanation / Answer

Answer:-

Cash flow from opreating activities Particulars Amount ('000) $ Net Income 182 Adjustment for non cash effects Depreciation expense 180 Patent amortization expense 10 Loss on sale of cash equivalents 6 Change in opreating assets & liabilities Decrease in Accounts Receiviable 12 Decrease in Inventory 10 Increase in Accounts payable 6 Increase in Interest payable 5 Increase in Income tax payble payable 5 Decrease in Salary payable -6 Net cash flow from opreating activities 410

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