Effects of McDonald€™s Current Liabilities on Its Statement of Cash Flows The following items are classified as current liabilities on McDonald€™s consolidated statements of financial condition (or balance sheet) at December 31 (in millions):

Required
1. McDonald€™s uses the indirect method to prepare its statement of cash flows. Prepare the Operating Activities section of the cash flow statement, which indicates how each item will be reflected as an adjustment to net income. If you did not include any of the preceding items, explain why.
2. How would you decide if McDonald€™s has the ability to pay these liabilities as they becomedue?

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December 31, 2008 2007 Current liabilities Notes payable Accounts payable Other taxes Accrued interest Accrued payroll and other liabilities Current maturities of long-term debt $ 620.4 252.7 173.8 1,459.2 $1,126.6 624.1 248.0 148.4 1,486.9 864.5 $4,498.5 Total current liabilities $ 2,5379