Question

For the just completed year, Strident Company had net income of $71,000. 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 $ 63,000 $ 80,000 Accounts receivable $ 158,000 $ 182,000 Inventory $ 430,000 $ 355,000 Prepaid expenses $ 12,000 $ 13,000 Current liabilities: Accounts payable $ 358,000 $ 390,000 Accrued liabilities $ 8,000 $ 12,500 Income taxes payable $ 33,000 $ 29,000 The Accumulated Depreciation account had total credits of $44,000 during the year. Required: Using the indirect method, determine the net cash provided by (used in) operating activities for the year. (Amounts to be deducted and negative amounts should be indicated with a minus sign.)

Answer 1

• All working forms part of the answer

Cash Flows from Operating Activities:
Net Income		$                  71,000.00
Adjustments:
Depreciation expense [total credits in Accumulated depreciation]	$                   44,000.00
Decrease in Accounts receivables [182000 to 158000]	$                   24,000.00
Increase in Inventory [355000 to 430000]	$                (75,000.00)
Decrease in Prepaid Expenses [13000 to 12000]	$                     1,000.00
Decrease in Accounts payable [358000 to 390000]	$                (32,000.00)
Decrease in Accrued liability [12500 to 8000]	$                   (4,500.00)
Increase in income tax payable [29000 to 33000]	$                     4,000.00
		$                (38,500.00)
Net Cash flows from Operating Activities		$                  32,500.00