CHAPTER 21 (8.)
Portions of the financial statements for Myriad Products areprovided below.
MYRIAD PRODUCTS COMPANY
Income Statement
For the Year Ended December 31, 2018
($ in millions) |
| Sales | | | | | $ | 1,000 | |
| Cost of goods sold | | | | | | 350 | |
| Gross margin | | | | | | 650 | |
| Salaries expense | $ | 175 | | | | | |
| Depreciation expense | | 108 | | | | | |
| Patent amortization expense | | 5 | | | | | |
| Interest expense | | 48 | | | | | |
| Loss on sale of land | | 4 | | | | 340 | |
| Income before taxes | | | | | | 310 | |
| Income tax expense | | | | | | 155 | |
| Net Income | | | | | $ | 155 | |
|
MYRIAD PRODUCTS COMPANY
Selected Accounts from Comparative Balance Sheets
December 31, 2018 and 2017
($ in millions) |
| Year | |
| 2018 | 2017 | Change |
| Cash | $ | 153 | | $ | 140 | | $ | 13 | |
| Accounts receivable | | 271 | | | 292 | | | (21 | ) |
| Inventory | | 470 | | | 490 | | | (20 | ) |
| Accounts payable | | 228 | | | 214 | | | 14 | |
| Salaries payable | | 112 | | | 126 | | | (14 | ) |
| Interest payable | | 72 | | | 60 | | | 12 | |
| Income taxes payable | | 63 | | | 50 | | | 13 | |
|
Required:
Prepare the cash flows from operating activities section of thestatement of cash flows for Myriad Products Company using thedirect method.
