For the just completed year, Hanna Company had net income of $144,000. Balances in the companys current asset and current liability accounts at the beginning and end of the year were as follows:

	December 31
	End of Year		Beginning of Year
Current assets:
Cash and cash equivalents	$	64,000	$	79,000
Accounts receivable	$	162,000	$	192,000
Inventory	$	441,000	$	352,000
Prepaid expenses	$	12,400	$	14,900
Current liabilities:
Accounts payable	$	364,000	$	390,000
Accrued liabilities	$	7,600	$	12,000
Income taxes payable	$	40,400	$	34,000

The Accumulated Depreciation account had total credits of $48,000 during the year. Hanna Company did not record any gains or losses during the year.

The companys income statement for the year appears below:

Sales	$	1,080,000
Cost of goods sold		585,000
Gross margin		495,000
Selling and administrative expenses		310,000
Income before taxes		185,000
Income taxes		41,000
Net income	$	144,000

Required:

Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.)

Hanna Company
Direct Method of Determining the Net Cash Flows from Operating Activities
Net income	$144,000
Adjustments to a cash basis:
		$144,000
Adjustments to a cash basis:
		0
Selling and administrative expenses
Adjustments to a cash basis:
		0
Income taxes
Adjustments to a cash basis:
		0
		$144,000