Question

Portions of the financial statements for Myriad Products are provided below.

MYRIAD PRODUCTS COMPANY Income Statement For the Year Ended December 31, 2018 ($ in millions)
Sales					$	840
Cost of goods sold						294
Gross margin						546
Salaries expense	$	135
Depreciation expense		92
Patent amortization expense		5
Interest expense		32
Loss on sale of land		4				268
Income before taxes						278
Income tax expense						139
Net Income					$	139

MYRIAD PRODUCTS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	Year
	2018			2017			Change
Cash	$	129		$	124		$	5
Accounts receivable		255			268			(13	)
Inventory		462			474			(12	)
Accounts payable		188			182			6
Salaries payable		104			110			(6	)
Interest payable		48			44			4
Income taxes payable		39			34			5

Required:
Prepare the cash flows from operating activities section of the statement of cash flows for Myriad Products Company using the direct method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Cash flow (Direct method)-partial
Particulars				amount
Cash receive from customers				853
cash paid to suppliers				-276
cash paid to employees				-141
cash paid for interest				-28
cash paid for tax				-134
net cash flow from operating activities				274
working
cash received from customer = sale+decrease in account receivable
840+13 = 853
cash paid to supplier= COSGS-increase in a/c payable-decrease in inventory
294-6-12 = 276
cash paid to employee = salaries exp+decrease in salaries payble
cash paid to employee = 135+6 = 141
cash paid for interest expense= interest exp-increase in interest payable
cash paid for interest expense = 32-4 = 28
cash paid for income taxes = income tax exp - increase in income tax payable
139-5 = 134