This question is from chapter 14 of Managerial Accounting 16 th edition by Ray G

Question

This question is from chapter 14 of Managerial Accounting 16th edition by Ray Garrison.

Exercise 14-2 Net Cash Provided by Operating Activities [LO14-2] For the just completed year, Hanna Company had net income of $76,500. Balances in the company's current asset and current liability accounts at the beginning and end of the year were as follows December 31 End of Beginning Year of Year Current assets: Cash and cash equivalents Accounts receivable Inventory Prepaid expenses $ 61,000 $ 79,000 $162,000 $196,000 $442,000 $352,000 $ 12,000 15,000 Current liabilities: Accounts payable Accrued liabilities Income taxes payable $352,000 $386,000 $ 8,500 12,000 $ 35,000 29,000 The Accumulated Depreciation account had total credits of $42,000 during the year. Hanna Company did not record any gains or losses during the year 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.) Hanna Company Statement of Cash Flows Indirect Method (partial)

Explanation / Answer

Hannna Company Statement of cash flows -Indirect Method (partial) Cash flow from Operating Activities: Net Income $       76,500 Depreciation Expense $       42,000 Decrease of Accounts Receivable $       34,000 Increase of inventory $     -90,000 Decrease of Prepaid Expense $         3,000 Decrease of Accounts Payable $     -34,000 Decrease of accrued liabilities $        -3,500 Increase of income tax payable $         6,000 Net Cash provided by Operatting Activities $       34,000

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