Balances in the company’s current assets and current liability

Balances in the company’s current assets and current liability

Subject: Business    / Accounting
Question

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:
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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:

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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.