For the just completed year, Hanna Company had net income of $58,500. Balances i
ID: 2577143 • Letter: F
Question
For the just completed year, Hanna Company had net income of $58,500. 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 $42,000 during the year. Hanna Company did not record any gains or losses during the year.
Required:
Using the indirect method, determine the net cash provided by operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.)
December 31
End of Year Beginning of Year Current assets: Cash and cash equivalents $ 55,000 $ 78,000 Accounts receivable $ 160,000 $ 200,000 Inventory $ 448,000 $ 355,000 Prepaid expenses $ 11,500 $ 14,500 Current liabilities: Accounts payable $ 368,000 $ 388,000 Accrued liabilities $ 8,500 $ 12,500 Income taxes payable $ 33,000 $ 27,000Explanation / Answer
Using the indirect method, determine the net cash provided by operating activities for the year.
Cash flow from operating activities Net income 58500 adjustment to reconcile net income Depreciation expenses 42000 Decrease account receivable 40000 Increase inventory (93000) Decrease prepaid expenses 3000 Decrease account payable (20000) Decrease accured liabilities (4000) Increase income tax payable 6000 Net cash flow from operating activities 32500