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.

SYNTRIC COMPANY Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Sales				$	276.7
Cost of goods sold					(171.0	)
Gross margin					105.7
Salaries expense	$	36.2
Insurance expense		17.1
Depreciation expense		10.0
Depletion expense		3.6
Bond interest expense		10.7			(77.6	)
Gains and losses:
Gain on sale of equipment					20.0
Loss on sale of land					(6.5	)
Income before tax					41.6
Income tax expense					(20.8	)
Net income				$	20.8
Cash Flows from Operating Activities:
Cash received from customers				$	230.0
Cash paid to suppliers					(160.0	)
Cash paid to employees					(33.0	)
Cash paid for interest					(9.6	)
Cash paid for insurance					(13.5	)
Cash paid for income taxes					(10.8	)
Net cash flows from operating activities				$	3.1

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).)

Answer 1

Net cash flow from Operating activities
Net Income				20.8	20.8
Adjustment to reconcile net income to net cash from operating activities
add: Depreciation				10
Depletion expenses				3.6
Gain on sale of equipment				-20
Loss on sale of land				6.5	0.1
Changes in operating assets & laibilities
less: increase in accounts receivable				-46.7
increase in inventory				0
increase in accounts payable				11
increase in salaries payable				3.2
decrease in prepaid insurance				3.6
decrease in bond discount				1.1
Increase in income tax payable				10	-17.8
Net cash flow from Operating activities					3.1
Working
increase in accounts receivable
sale revenue				276.7
less: cash receive from customer				-230
increase in accounts receivable				46.7
increase in accounts payable
cost of goods sold				171
less: cash paid to supplier				-160
increase in accounts payable				11
Increase in salaries payable
salaries expenses				36.2
less: cash payment for employees				-33
Increase in salaries payable				3.2
Decrease in prepaid insurance
insurance expenses				17.1
less: cash payment for insurance				-13.5
Decrease in prepaid insurance				3.6
Bond discount
Bond interest expenses				10.7
less: cash paid for interest				-9.6
Bond discount				1.1
Increase in income tax payable
Income tax expenses				20.8
less: cash paid for income tax				-10.8
Increase in income tax payable				10