Exam 17: The Direct Method of Determining the Net Cash Provided by Operating Activities

Carson Corporation's comparative balance sheet and income statement for last year appear below: Carson did not dispose of any property, plant, and equipment during the year. It constructs its statement of cash flows using the direct method. Required: Using the direct method, prepare in good form the operating activities section of the statement of cash flows.

Last year Anderson Corporation reported a cost of goods sold of $100,000. The company's inventory at the beginning of the year was $11,000, and its inventory at the end of the year was $19,000. The prepaid expense account increased by $2,000 between the beginning and end of the year, and the accounts payable account decreased by $4,000. Cost of goods sold adjusted to the cash basis under the direct method would be:

Wister Corporation had net sales of $462,000 for the just completed year. Shown below are the beginning and ending balances of various Wister accounts: Wister prepares its statement of cash flows using the direct method. On its statement of cash flows, what amount should Wister show for its net sales adjusted to a cash basis (i.e., cash received from sales)?

Harkey Corporation's balance sheet and income statement appear below: Cash dividends were $29. The company sold equipment for $15 that was originally purchased for $6 and that had accumulated depreciation of $2. Required: Using the direct method, determine the net cash provided by operating activities.

Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. On the statement of cash flows, the income tax expense adjusted to a cash basis would be:

The most recent balance sheet and income statement of Oldaker Corporation appear below: The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:

Kilduff Corporation's balance sheet and income statement appear below: The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) financing activities for the year was:

Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. On the statement of cash flows, the sales adjusted to a cash basis would be:

Kuma, Inc. had cost of goods sold of $106,000 for the just completed year. Shown below are the beginning and ending balances of various Kuma accounts: Kuma prepares its statement of cash flows using the direct method. On its statement of cash flows, what amount should Kuma show for its cost of goods sold adjusted to a cash basis (i.e., cash paid to suppliers)?

The changes in each balance sheet account for Carver Corporation during the year just completed are as follows: Carver Corporation's income statement for the year just ended shows the following: The company did not dispose of any property, plant, and equipment, buy any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. Carver Corporation uses the direct method to construct its statement of cash flows. Required: a. Determine the sales adjusted to the cash basis. b. Determine the cost of goods sold adjusted to the cash basis. c. Determine the selling and administrative expenses adjusted to a cash basis. d. Determine the net cash provided (used) by operating activities. e. Determine the net cash provided (used) by investing activities. f. Determine the net cash provided (used) by financing activities.

Comparative balance sheets and the income statements for Ellis Corporation are presented below: The following additional information is available for the year: * During the year, the company sold long-term investments for $35,500 that had been purchased for $38,000. * The company did not sell any property, plant, and equipment during the year or repurchase any of its own common stock. * All sales were on credit. * The company paid a cash dividend of $25,000. * The company paid cash to retire $15,000 of bonds payable. Required: a. Using the indirect method, determine the net cash provided by operating activities. b. Using the direct method, determine the net cash provided by operating activities. c. Using the net cash provided by operating activities amount from either part a or b, prepare a statement of cash flows.

Kilduff Corporation's balance sheet and income statement appear below: The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) investing activities for the year was:

Shimko Corporation's most recent comparative balance sheet and income statement appear below: The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities for the year was:

The change in each of Kendall Corporation's balance sheet accounts last year follows: Kendall Corporation's income statement for the year was: There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by operating activities on the statement of cash flows is determined using the direct method. The net cash provided (used) by financing activities would be:

Carr Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $47,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. Required: Construct in good form the operating activities section of the company's statement of cash flows for the year using the direct method.

Shimko Corporation's most recent comparative balance sheet and income statement appear below: The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) financing activities for the year was:

Under the direct method of determining the net cash provided by operating activities on the statement of cash flows, one step in adjusting selling and administrative expenses from an accrual to a cash basis is to subtract any increase in prepaid expenses.

Last year, Knox Corporation reported on its income statement sales of $375,000 and cost of goods sold of $140,000. During the year, the balance in accounts receivable increased $30,000, the balance in accounts payable decreased $25,000, and the balance in inventory increased $10,000. The company uses the direct method to determine the net cash provided by operating activities on its statement of cash flows. Under the direct method, cost of goods sold adjusted to a cash basis would be:

Hayward Corporation had net sales of $610,000 and cost of goods sold of $360,000 for the just completed year. Shown below are the beginning and ending balances for the year of various accounts: The company prepares its statement of cash flows using the direct method. On its statement of cash flows, what amount should Howard show for its net sales adjusted to a cash basis (i.e., cash received from sales)?

The most recent balance sheet and income statement of Dallavalle Corporation appear below: Cash dividends were $12. The company did not retire or sell any property, plant, and equipment during the year. The net cash provided by (used in) operating activities for the year was: