Question

Portions of the financial statements for Clear Transmissions Company are provided below.

CLEAR TRANSMISSIONS COMPANY Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Sales					$	1,800
Cost of goods sold						720
Gross margin						1,080
Salaries expense	$	316
Depreciation expense		220
Patent amortization expense		26
Interest expense		72
Loss on sale of cash equivalents		14				648
Income before taxes						432
Income tax expense						216
Net Income					$	216

CLEAR TRANSMISSIONS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
	Year
	2018			2017			Change
Cash	$	126		$	116		$	10
Accounts receivable		239			256			(17	)
Inventory		448			466			(18	)
Accounts payable		180			166			14
Salaries payable		88			102			(14	)
Interest payable		49			36			13
Income taxes payable		36			26			10

Required:
Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Calculation of cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the direct method
	(in '000)
Cash received from Customers	$1,817.00
Cash paid to suppliers	-$688.00
Cash aid to employees	-$330.00
Interest Paid	-$59.00
Income Tax paid	-$206.00
Cash flow from Operating activities	$534.00
Working
Cash received from customers
Accounts receivables 2017	$256.00
Add : Sales	$1,800.00
Less : Accounts Receivables 2018	$239.00
Cash received from customers	$1,817.00
Cash paid to suppliers
Accounts Payable 2017	$166.00
Add: Cost of good sold	$720.00
Less : Accounts Payable 2018	$180.00
Less : Decrease in Inventory	$18.00
Cash paid to suppliers	$688.00
Cash paid to employees
Salaries Payable 2017	$102.00
Add : Salaries Expense	$316.00
Less : Salaries Payable 2018	$88.00
Cash paid to employees	$330.00
Interest Paid
Interest Payable 2017	$36.00
Add : Interest Expense	$72.00
Less : Interest Payable 2018	$49.00
Interest Paid	$59.00
Income Tax paid
Income tax payable 2017	$26.00
Add : Income Tax expense	$216.00
Less : Income Tax payable 2018	$36.00
Income Tax Paid	$206.00