ADMS 3530 Lecture Notes - Operating Cash Flow, Tax Shield, Cash Flow
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8 May 2012
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The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Macrosoft Corporation.
MACROSOFT CORPORATION Income Statement For the Year Ended December 31, 2016 ($ in millions) |
Revenues and gains: | ||||||
Sales | $ | 324.00 | ||||
Gain on sale of cash equivalents | 2.70 | |||||
Gain on sale of investments | 24.70 | $ | 351.40 | |||
Expenses and loss: | ||||||
Cost of goods sold | $ | 127.00 | ||||
Salaries | 40.70 | |||||
Interest expense | 12.70 | |||||
Insurance | 20.70 | |||||
Depreciation | 10.70 | |||||
Patent amortization | 4.70 | |||||
Loss on sale of land | 6.70 | 223.20 | ||||
Income before tax | 128.20 | |||||
Income tax expense | 64.10 | |||||
Net income | $ | 64.10 | ||||
Reconciliation of Net Income to Net Cash Flows from Operating Activities ($ in millions) | |||
Net income | $ | 64.10 | |
Adjustments for noncash effects: | |||
Depreciation expense | 10.70 | ||
Patent amortization expense | 4.70 | ||
Loss on sale of land | 6.70 | ||
Gain on sale of investment | (24.70 | ) | |
Decrease in accounts receivable | 6.70 | ||
Increase in inventory | (12.70 | ) | |
Increase in accounts payable | 18.70 | ||
Decrease in bond discount | 1.70 | ||
Increase in salaries payable | 6.70 | ||
Decrease in prepaid insurance | 4.70 | ||
Increase in income tax payable | 10.70 | ||
Net cash flows from operating activities | $ | 98.00 | |
Required: |
Prepare the cash flows from operating activities section of the statement of cash flows (direct method). (Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Amounts to be deducted should be indicated with a minus sign.) |