For the just completed year, Hanna Company had net income of S74,000. Balances i

ID: 2539351 • Letter: F

Question

For the just completed year, Hanna Company had net income of S74,000. Balances in the company's current asset and current liability accounts at the beginning and end of the year were as follows: Beginning of Year End of Year Current assets: Cash S 55,000 S 83,000 S 158,000 S188,000 $ 442,000 S 367,000 S 12,500 S13,500 Prepaid expenses Current iabilities: Accounts payable Accrued liabilites Income taxes payable S 364,000 S393,000 S 8,000 S12,500 S 33,000 S30,000 The Accumulated Depreciation account had total credits of $42,000 during the year. Hanna Company did not record any gains or losses during the yean Required: Use the indirect method to determine the net cash provided by (or used in) operating activites for the year (List any deduction in cash and cash outflows as negative amounts.) Statement of Cash Flows-Indirect Method (partial) Net income Adjustments to convert net income to a cash basis: Net cash provided by (used in) operating activities

Explanation / Answer

Hanna Company

Statement of Cash Flows - Indirect Method

Net Income

74000

Adjustment to convert net income to a cash basis:

Depreciation

42000

Decrease in Accounts Receivable (186000-158000)

28000

Increase in inventory (367000-442000)

-75000

Decrease in prepaid expense (13500-12500)

1000

Decrease in accounts payable (396000-364000)

-32000

Decrease in Accrued Liabilities (12500-8000)

-4500

Increase in income taxes payable (30000-33000)

3000

-37500

Net cash provided by operating activities

36500