Reference no: EM132513042

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 $2,520

Cost of goods sold 1,008

Gross margin 1,512

Salaries expense$460

Depreciation expense 280

Patent amortization expense 50

Interest expense 120

Loss on sale of cash equivalents 26

936

Income before taxes 576

Income tax expense 288

Net Income $288

CLEAR TRANSMISSIONS COMPANY

Selected Accounts from Comparative Balance Sheets

December 31, 2018 and 2017 ($ in 000s)

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:

Question 1: Prepare the cash flows from operating activities section of the statement of cash flows for Clear Transmissions Company using the direct method.