EXTRA CREDIT-PART IV (10 points) Harrell Company reported net income of $320,000

Question

EXTRA CREDIT-PART IV (10 points) Harrell Company reported net income of $320,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows End of Year Beginning of Year Cash Accounts receivable Inventories Prepaid expenses Accounts payable Income taxes payable $22,000 17,000 55,000 7,500 14,000 600 $15,000 32,000 65,000 5,000 18,000 1,200 Instructions Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method

Explanation / Answer

Answer:-

Harrell Company Cash Flow statement (Using Indirect Method) Particulars Amount $ Net Income 320000 Adjustments to reconcile net income to net cash provided by opreating activities Adjustment for non cash effects Depreciation 75000 Change in opreating assets & liabilities Decrease in Accounts Receiviable 15000 Decrease in Inventory 10000 Increase in Prepaid expense -2500 Decrease in Accounts payable -4000 Decrease in Income tax payble payable -600 Net cash flow from opreating activities 412900

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