Compute Cash Provided by Operating Activities

Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2. Use a minus to indicate any decreases in cash or cash outflows.

Horn Company's condensed income statement for the year ended December 31, 20-2, was as follows:

Net sales				$1,220,000
Cost of goods sold				740,000
Gross profit				$480,000
Operating expenses				142,000
Operating income				$338,000
Other revenues and expenses:
Interest revenue		$420
Interest expense		(1,200)		(780)
Income before taxes				$337,220
Income tax expense				118,000
Net income				$219,220

Additional information obtained from Horn's comparative balance sheet and auxiliary records as of December 31, 20-2 and 20-1, was as follows:

	20-2	20-1
Accounts receivable	$135,000	$122,600
Merchandise inventory	145,300	158,900
Accounts payable	45,000	87,100
Income tax payable	2,000	1,000
Supplies and prepayments	11,300	6,800
Accrued and withheld payroll taxes	2,750	3,700
Accrued interest receivable	90	210
Accrued interest payable	240	160

Depreciation expense for 20-2, included in operating expenses on the income statement, was $32,000.

Statement of Cash Flows

Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2. Use a minus to indicate any decreases in cash or cash outflows.

Horn Company
Statement of Cash Flows (Partial)
For Year Ended December 31, 20-2
Cash flows from operating activities:
Net income
Adjustments for changes in current assets and liabilities related to operating activities:
Increase in accounts receivable
Decrease in merchandise inventory
Decrease in accounts payable
Increase in income tax payable
Increase in supplies and prepayments
Decrease in accrued and withheld payroll taxes
Decrease in accrued interest receivable
Increase in accrued interest payable
Noncash expenses:
Depreciation expense
Net cash provided by operating activities