For the just completed year. Hanna Company had net income of $43,000. Balances i
ID: 2488362 • Letter: F
Question
For the just completed year. Hanna Company had net income of $43,000. Balances in the company's current asset and current liability accounts at the beginning and end of the year were as follows: The Accumulated Depreciation account had total credits of $58,000 during the year. Hanna Company did not record any gains or losses during the year. Required: Use the indirect method to determine the net cash provided by (or used in) operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.)Explanation / Answer
A. CASH FLOW FROM OPERATIONS
NET PROFIT BEFORE TAX 43000
ADD DEPRECIATION 58000
CASH FLOW FROM OPERATIONS BEFOR ADJUCTING WORKING CAPITAL CHANGES 101000
ADJUSTMENT FOR WORKING CAPITAL CHANGES
1.DECREASE IN DEBTORS 32000 2. INCREASE IN INVENTORY (81000) 3.DECREASE IN PREPAID EXPENSES 1500
4.DECREASE IN ACCOUNT PAYABLES (26000)
5.DECREASE IN ACCRUED LIABILITIES (3500)
6. INCREASE IN INCOMETAX PAYABLE 10000
NET CASH FLW FROM OPERATIONS 34000