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					$	700
Cost of goods sold						245
Gross margin						455
Salaries expense	$	100
Depreciation expense		78
Patent amortization expense		5
Interest expense		18
Loss on sale of land		4				205
Income before taxes						250
Income tax expense						125
Net Income					$	125

MYRIAD PRODUCTS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	Year
	2018			2017			Change
Cash	$	117		$	110		$	7
Accounts receivable		230			247			(17	)
Inventory		445			460			(15	)
Accounts payable		165			154			11
Salaries payable		85			96			(11	)
Interest payable		40			30			10
Income taxes payable		30			20			10

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 collection from receivables = sales+ decrease in receivables

             700+17

             717

payment to suppliers = Cost of goods sold -Decrease in inventory- increase in payables

     = 245-15-11

       = 219

salary paid = salary expense + decrease in salary payable

                100+11

                111

Interest paid =interest expense - increase in interest payable

18 -10 = 8

Income tax payable = income tax expense -increase in income tax payable

          125- 10

            115

Cash flow statement for the year ended 31 dec 2018
cash flow from operating activity (Direct)
Collection from receivable	717
less:
Payment to suppliers	(219)
salary paid	(111)
Interest paid	(8)
Income tax paid	(115)
Net cash flow from operating activity	264