For the just completed year, Hanna Company had net income of $62,500. Balances i
ID: 2570440 • Letter: F
Question
For the just completed year, Hanna Company had net income of $62,500. Balances in the company’s current asset and current liability accounts at the beginning and end of the year were as follows:
December 31
The Accumulated Depreciation account had total credits of $60,000 during the year. Hanna Company did not record any gains or losses during the year.
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.)
For the just completed year, Hanna Company had net income of $62,500. Balances in the company’s current asset and current liability accounts at the beginning and end of the year were as follows:
Explanation / Answer
Statement of Cash Flows—Indirect Method (partial) Net income 62500 Adjustments to convert net income to a cash basis: Depreciation 60000 Decrease in accounts receivable 26000 Increase in inventory -84000 Decrease in prepaid expenses 2500 Decrease in accounts payable -30000 Decrease in accrued liabilities -3500 Increase in income taxes payable 6000 -23000 Net cash provided by operating activities 39500