Exam 18: The Direct Method of Determining the Net Cash Provided by Operating Activities

Cridberg Corporation's selling and administrative expenses for last year totaled $260,000.During the year the company's prepaid expense account balance increased by $18,000 and accrued liabilities decreased by $12,000.Depreciation for the year was $25,000.Based on this information,selling and administrative expenses adjusted to a cash basis under the direct method on the statement of cash flows would be:

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:

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:

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)financing activities for the year was:

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)operating activities for the year was:

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:

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:

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,sales adjusted to a cash basis would be:

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:

Last year Lawn Corporation reported sales of $115,000 on its income statement.During the year,accounts receivable decreased by $10,000 and accounts payable increased by $15,000.The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows.The sales revenue adjusted to a cash basis for the year would be:

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:

The changes in Northrup Corporation's balance sheet account balances for last year appear below: The company's income statement for the year appears below: The company declared and paid $28,000 in cash dividends during the year.It did not dispose of 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:

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.

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)?

If accounts receivable increase during a period,then the amount of cash collected from customers will be less than the amount of sales reported on the income statement for the period.

Maloney Corporation's balance sheet and income statement appear below: Cash dividends were $42.The company did not dispose of any property,plant,and equipment during the year. Required: Prepare the operating activities section of the statement of cash flows using the direct method.

Under the direct method of determining the net cash provided by operating activities on the statement of cash flows,an increase in accounts receivable would be added to sales revenue to convert revenue to a cash basis.

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 investing activities would be:

During the year the balance in the Accounts Receivable account increased by $6,000.In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows,it would be necessary to:

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: