Using the DIRECT METHOD, prepare a cash flow statement in accordance with U.S. GAAP.

Income Statement , Year-ended December 31 (in millions)

	2011
Sales	$12,150
Cost of goods sold	(8,900)
Salaries and wages	(1,240)
Depreciation	(625)
Other operating expense	(1,100)
Gain on sale of equipment1	120
Interest expense	(145)
Income tax expense	(84)
Net income	$176

¹ Book value of equipment was $880.

Balance Sheet

As of December 31 (in millions)

	2011	2010
Cash	$580	$350
Accounts receivable	472	510
Inventory	1,640	1,725
Prepaid expenses	82	68
Property, plant and equipment, net	4,480	4,845
Total assets	$7,254	$7,498
Accounts payable	$1,490	$1,620
Salaries payable	42	48
Interest payable	48	35
Income tax payable	32	60
Other accrued liabilities	450	540
Long-term debt	1,583	1,557
Common stock	2,175	2,070
Retained earnings	1,434	1,568
Total liabilities and equity	$7,254	$7,498

1. Cash collections are closest to

	12,112
	12,150

12,188

Answer rating: 100% (QA)

Cash collections Particulars A... View the full answer