Answer:
Net cash used in Operating Activities: 834.904
Explanation:
Net Income 344,557
Depreciation Expense 12,385
Amortization Expense 27,000
Amortization of Bond Premium (5,000)
Unearned Compensation (122,917)
Realized gain on sale of equipment (1,000)
Adjusted income 255,025
Change in working capital:
Decreased in A/R 93,275
Increase in Inventory (483,264)
Increase in Prepaid Rent (6,767)
Increase in Prepaid Insurance (12,833)
Decrease in Supplies 2,341
Increase in A/P 438,584
Increase in Salaries Payable 6,000
Increase in Utilities Payable 9,000
Increase in Payroll Taxes Payable 300
Increase in Interest Payable 13,292
Increase in Income Taxes Payable 91,591
Increase in Notes Payable- Short Term 428,360
Total change in working capital: 579,879
Net cash used in Operating Activities: 834.904
First, we adjust the net income to remove the non-monetary concepts like depreciation and amortization
We also work based in the current asset and current liabilities account for the cash used as working capital:
increase of cash represent use of cash as it was used to acquire them.
decrease of cash means the asset was converted into cash
increase of liabilities means the use of cash to pay was delay thus, we increase our cash
and finally decrease of liabilities means it was used to settle
