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. $ 273.2 (179.8) 93.4 (65.7) SYNTRIC COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands) Sales Cost of goods sold Gross margin Salaries expense $24.2 Insurance expense 17.9 Depreciation expense 7.5 Depletion expense 4.6 Interest expense 11.5 Gains and losses: Gain on sale of equipment Loss on sale of land Income before tax Income tax expense Net income Cash Flows from Operating Activities: Cash received from customers Cash paid to suppliers Cash paid to employees Cash paid for interest Cash paid for insurance Cash paid for income tax Net cash flows from operating activities 24.0 (6.9 44.8 (22.4) 22.4 $ $ 250.0 (168.0) (20.0) (10.0) (13.9) (11.6) $ 26.5

Answer 1

Net Cash flows from Operating activities section of Cash flow statement:

RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Cash Flows from opearting activities
Net income	$22.4
Adjustments for non cash effect:
Depreciation expense	$7.5
Depletion expense	$4.6
Loss on sale on land	$6.9
Gain on sale on equipment	($24)
	$17.4
Changes in operating assets and liabilities:
Increase in accounts receivable	($23.2)
Increase in salaries payable	$4.2
Increase in accounts payable($179.8 - $168)	$11.8
Increase in interest payable ($11.5 - $10)	$1.5
Decrease in prepaid insurance	$4
Increase in income tax payable	$10.8
Net cash flows from operating activities	$26.5

Notes

1. Increase in Accounts recievable

= Sales - Cash reciepts from customers

= $273.2 - $250

= $23 2

2. Increase in Salaries payable

= Salries expense - Salaries paid to employees

= $24.2 - $20

= $4.2

3. Increase in Accounts payable

= Cost of goods sold - Cash paid to suppliers

= $179.8 - $168

= $11.8

4. Increase in interest payable

= Interest expense - Interest paid

= $11.5 - $10

= $1.5

5. Decrease in prepaid insurance

= Insurance expense - Insurance paid

= $17.9 - $13.9

= $4

6. Increase in income tax payable

= income tax expense - income tax paid

= $22.4 - $11.6

= $10.8

7. In order to reconcile net income

- Any increase in assets and decrease in laibilities should be deducted.

- Any decrease in assets and increase in assets should be added.

_____×_____

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