Question

1 Exercise 14-2 Net Cash Provided by Operating Activities [LO14-2] For the just completed year, Hanna Company had net income of $93,500. Balances in the company's current asset and current liability accounts at the beginning and end of the year were as follows 2 points December 31 End of Beginning of Year Year еВook Current assets Cash and cash 61,000 77,000 equivalents Accounts receivable Hint $158,000 $180,000 $445,000 $358,000 $ 11,500 $ 14,000 Inventory Prepaid expепвав Current liabilities : Print Accounts payable Accrued 1iabilities $356,000 $398,000 8,000 $ 12,000 Income taxes payable 32,000 26,000 Reference 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.) Hanna Company Statement of Cash Flows-Indirect Method (partial)

Answer 1

Ans:

Hanna Company Statement of Cash Flows –Indirect Method( Partial)

Particulars	Amount($)
Net income	$93500
Adjustments to convert net income to a cash basis
Depreciation	$42000
Decrease in A/R($180000-$158000)	$22000
Increase in Inventory(445000-$358000)	-$87000
Decrease in Prepaid expenses(14000-11500)	$2500
Decrease in A/P($398000-$356000)	-$42000
Decrease in accrued liabilities(12000-8000)	-4000
Increase in Income taxes payable(32000-26000)	$6000
Net cash provided by operating activities	`$33,000