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

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:

Under the direct method of determining the net cash provided by operating activities on the statement of cash flows,a decrease in prepaid expenses would be added to selling and administrative expenses to convert selling and administrative expenses to a cash basis.

Reven Corporation prepares its statement of cash flows using the direct method.Last year,Reven reported Income Tax Expense of $25,000.At the beginning of last year,Reven had a $5,000 balance in the Income Taxes Payable account.At the end of last year,Reven had a $9,000 balance in the account.On its statement of cash flows for last year,what amount should Reven have shown for its Income Tax Expense adjusted to a cash basis (i.e. ,income taxes paid)?

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)?

Crossland Corporation reported sales on its income statement of $435,000.On the statement of cash flows,which used the direct method,sales adjusted to a cash basis were $455,000.Crossland Corporation reported the following account balances on its balance sheet for the year: Based on this information,the beginning balance in accounts receivable was:

The ending balance of accounts receivable was $69,000.Sales,adjusted to a cash basis using the direct method on the statement of cash flows,were $354,000.Sales reported on the income statement were $378,000.Based on this information,the beginning balance in accounts receivable was:

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.

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 selling and administrative expense adjusted to a cash basis 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)investing activities for the year was:

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.

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. Using the direct method,the cost of goods sold adjusted to a cash basis would be:

Last year Marton Corporation reported a cost of goods sold of $720,000 on its income statement.The following additional data were taken from the company's comparative balance sheet for the year: The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows.The cost of goods sold adjusted to a cash basis would be:

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.

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 cost of goods sold adjusted to a cash basis (i.e. ,cash paid to suppliers)?

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:

Brew Corporation's most recent comparative balance sheet and income statement appear below: Cash dividends were $37.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: