The income statement and statement of cash flows for ABC Equipment Company for 2014 are provided below.

Supplemental Information:
Other current liabilities represent obligations for general and administrative expenses.

Required:
Derive a direct method presentation of cash flow from operating activities for ABC Equipment Company. Assume all depreciation is included in General and administrativeexpenses.

Transcribed Image Text:

ABC Equipment Company Income Statement for the Year Ended December 31,2014 $ in millions) S81,860.0 83.2 856.0 82,799.2 39,853.2 22,280.8 11,549.2 3,646.4 77,329.6 5,469.6 Gain on the sale of marketable securities Equity in earnings of affiliates Total revenues and gains Cost of goods sold General and administrative expenses Income tax expense Total expenses Net income ABC Equipment Company Statement of Cash Flows for Year Ended December 31, 2014 Net income 5,469.6 Adjustments for noncash transactions: Increase in deferred tax liability Equity in undistributed earnings of affiliates Gain from sale of marketable securities (Increase) decrease in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepayments ncrease (decrease) in accounts payable for inventory Increase (decrease) in other current liabilities Cash flow fromn operations 2,656.0 328.0 (188.4) (83.2) 298.4 (795.6) (161.2) 135.6 (443.2) Sale of marketable securities Acquisition of marketable securities Acquisition of property, plant, and equipment 199.2 (292.8) (3,502.8) 178.0) 3,774.4) Acquisition of subsidiaries Cash flow from investing activities Common stock issued to employees Repurchase of common stock Dividends paid to stockholders Additions to short-term borrowine Additions to long-term debt Payments on long-term debt Cash flow from financing activities 137.6 (403.6) (971.6) 510.4 486.4 (1,905.6) (2,146.4) 1,295.2 2,027.2 S 3,322.4 Net change in cash Beginning of year cash balance End of year cash balance