Answer:
Net Cash from Operating Activities is $488 after making all the non-adjustments, working capital changes adjustments and adjustments of interest and tax cash payments.
Solution in Excel file is attached for your reference.
Explanation:
Clear Transmissions Company
Statement of Cash Flows for the year ended December 31, 2018
Net Profit before tax $396
Add: Adjustment for Interest Expense $60
Profit from operations $456
Adjustment of Non Cash Expenses:
Depreciation $205
Patent Amortization $20
Loss on Sale of Cash Equivalents $11
Decrease in Salaries & Wages Payable $(11)
Increase in Interest Payable $10
Increase in Tax Payable $10
Operating profit before working capital changes $701
Working Capital Changes
Decrease in Inventory $15
Decrease in Accounts Receivables $17
Increase in Accounts Payable $11
Cash generated from Operations $744
Tax Paid (Working 1) $(188)
Interest Paid (Working 2) $(50)
Net cash from operating activities $506
Working 1
Opening Tax Payable $20
Add: Tax Payable charged to Income Statement $198
Less: Cash Payment (Balancing Figure) $(188)
Closing Tax Payable $30
Working 2
Opening Interest Payable $30
Add: Interest Payable charged to Income Statement $60
Less: Cash Payment (Balancing Figure) $(50)
Closing Interest Payable $40
