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					$	1,320
Cost of goods sold						500
Gross margin						820
Salaries expense	$	220
Depreciation expense		180
Patent amortization expense		10
Interest expense		40
Loss on sale of cash equivalents		6				456
Income before taxes						364
Income tax expense						182
Net Income					$	182

CLEAR TRANSMISSIONS COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
	Year
	2018			2017			Change
Cash	$	102		$	100		$	2
Accounts receivable		220			232			(12	)
Inventory		440			450			(10	)
Accounts payable		140			134			6
Salaries payable		80			86			(6	)
Interest payable		25			20			5
Income taxes payable		15			10			5

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.)
Cash Flows from Operating Activities:

Cash received from customers$1,332Cash

paid to suppliers(484)

Cash paid to employees(226)

Cash paid for interest(35)

Cash paid for income taxes(177)

Cash decrease from sale of cash equivalents?

Net cash flows from operating activities $410

Answer 1

Ans. Cash decrease from sale of cash equivalents will be equal to the loss on sale of cash equivalents = $6

Cash Flows from Operating Activities:

Cash received from customers $1,332

Cash paid to suppliers. (484)

Cash paid to employees. (226)

Cash paid for interest. (35)

Cash paid for income taxes. (177)

Cash decrease from sale of cash equivalents. (6)

Net cash flows from operating activities . $404