For the just completed year, Hanna Company had net income of $66,000. Balances i
ID: 2611258 • Letter: F
Question
For the just completed year, Hanna Company had net income of $66,000. Balances in the company’s current asset and current liability accounts at the beginning and end of the year were as follows:
December 31 End of Year / Beginning of Year Current assets:
Cash and cash equivalents $ 65,000 / $ 80,000
Accounts receivable $ 166,000 $ 198,000
Inventory $ 439,000 $ 346,000
Prepaid expenses $ 11,500 $ 14,500
Current liabilities:
Accounts payable $ 364,000 $ 392,000
Accrued liabilities $ 8,000 $ 12,000
Income taxes payable $ 34,000 $ 29,000
The Accumulated Depreciation account had total credits of $56,000 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.)
Explanation / Answer
Using the indirect method, determine the net cash provided by operating activities for the year.
Net income 66000 Adjustment to reconcile net income Decrease account receivable 32000 Increase inventory (93000) Decrease prepaid exp 3000 Decrease account payable (28000) Decrease accured liabilities (4000) Increase income tax payable 5000 Net cash provided by operating activities (19000)