Duggar Company had a net income of 55,000.
A) Balances in the company's current assets and current liability accounts at the beginning and end of the years were:
|
|
End
of the Year
|
Beginning
of the Year
|
|
Current Assets
|
|
|
|
Cash
|
$44,560
|
$66,324
|
|
Accounts Receivable
|
135,342
|
101,222
|
|
Inventory
|
243,321
|
162,435
|
|
Prepaid Expenses
|
9,381
|
10,435
|
|
|
|
|
|
Current Liabilities
|
|
|
|
Accounts Payable
|
201,456
|
173,243
|
|
Accrued Liabilities
|
3,202
|
5,893
|
B) Balances in the company's income statement were:
|
Sales
|
$ 370,000
|
|
Less Cost of Goods Sold
|
140,000
|
|
Gross Margin
|
230,000
|
|
Less Operating Expenses
|
160,000
|
|
Income Before Taxes
|
70,000
|
|
Less Income Taxes
|
15,000
|
|
Net Income
|
$55,000
|
The deferred taxes liability account on the balance sheet increase by 5,000 during the year and depreciation charges were $40,000.
Required:
- A. The indirect method, determine the net cash provided by operating activities for the year.
- B. Using the direct method, convert the company's income statement to a cash basis.