22) 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:
Ending
Beginning
Inventory
$
105,000
$
85,000
Accounts Payable
$
65,000
$
92,000
The company uses the direct method to determine the net cash provided by (used in) operating
activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would
be:
A) $740,000
B) $767,000
C) $747,000
D) $673,000
Beginning
Inventory
$
105,000
$
85,000
$
+20,000
Accounts Payable
$
$
92,000
$
Cost of goods sold (as reported)
$
720,000
Adjustments to a cash basis:
Increase in inventory
+20,000
Decrease in accounts payable
+27,000
Cost of goods sold adjusted to a cash basis
$
767,000
Shimko Corporation’s most recent comparative balance sheet and income statement appear
below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Assets:
Cash and cash equivalents
$
37
$
32
Accounts receivable
34
32
Inventory
59
55
Property, plant and equipment
447
390
Less accumulated depreciation
212
188
Total assets
$
365
$
321
Liabilities and stockholders’ equity:
Accounts payable
$
37
$
32
Bonds payable
217
270
Common stock
21
20
Retained earnings
90
(1
)
Total liabilities and equity
$
365
$
321
Income Statement
Sales
$891
Cost of goods sold
539
Gross margin
352
Selling and administrative expense
195
Net operating income
157
Income taxes
47
Net income
$110
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.
23) The net cash provided by (used in) operating activities for the year was:
A) $23
B) $133
C) $157
D) $87
24) The net cash provided by (used in) investing activities for the year was:
A) $57
B) $(57)
C) $33
D) $(33)
25) The net cash provided by (used in) financing activities for the year was:
A) $(19)
B) $(53)
C) $1
D) $(71)
25
The most recent balance sheet and income statement of Oldaker Corporation appear below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Assets:
Cash and cash equivalents
$
31
$
29
Accounts receivable
73
79
Inventory
44
45
Property, plant and equipment
728
590
Less accumulated depreciation
253
242
Total assets
$
623
$
501
Liabilities and stockholders’ equity:
Accounts payable
$
56
$
63
Accrued liabilities
21
22
Income taxes payable
26
28
Bonds payable
121
110
Common stock
33
30
Retained earnings
366
248
Total liabilities and stockholders’ equity
$
623
$
501
Income Statement
Sales
$921
Cost of goods sold
575
Gross margin
346
Selling and administrative expense
117
Net operating income
229
Income taxes
69
Net income
$160
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.
26) The net cash provided by (used in) operating activities for the year was:
A) $168
B) $8
C) $152
D) $229
27) The net cash provided by (used in) investing activities for the year was:
A) $(127)
B) $(138)
C) $138
D) $127
28) The net cash provided by (used in) financing activities for the year was:
A) $(42)
B) $3
C) $11
D) $(28)
28
Kilduff Corporation’s balance sheet and income statement appear below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Assets:
Cash and cash equivalents
$
36
$
38
Accounts receivable
36
32
Inventory
49
55
Property, plant and equipment
707
580
Less accumulated depreciation
316
315
Total assets
$
512
$
390
Liabilities and stockholders’ equity:
Accounts payable
$
71
$
64
Accrued liabilities
22
19
Income taxes payable
34
41
Bonds payable
71
100
Common stock
32
30
Retained earnings
282
136
Total liabilities and stockholders’ equity
$
512
$
390
Income Statement
Sales
$1,174
Cost of goods sold
771
Gross margin
403
Selling and administrative expense
146
Net operating income
257
Gain on sale of equipment
14
Income before taxes
271
Income taxes
81
Net income
$190
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.
29) The net cash provided by (used in) operating activities for the year was:
A) $187
B) $231
C) $257
D) $201
30) The net cash provided by (used in) investing activities for the year was:
A) $19
B) $(118)
C) $(137)
D) $118
31) The net cash provided by (used in) financing activities for the year was:
A) $(44)
B) $(71)
C) $2
D) $(29)
32
The change in each of Kendall Corporation’s balance sheet accounts last year follows:
Increase
Decrease
Cash and cash equivalents
$
3,000
Accounts receivable
$
2,000
Inventory
$
3,000
Prepaid Expenses
$
4,000
Long-term Investments
$
15,000
Property, Plant and Equipment
$
10,000
Accumulated Depreciation
$
8,000
Accounts payable
$
9,000
Accrued Liabilities
$
6,000
Bonds Payable
$
13,000
Common Stock
$
5,000
Retained Earnings
$
4,000
Kendall Corporation’s income statement for the year was:
Sales
$
300,000
Cost of goods sold
180,000
Gross margin
120,000
Selling and administrative expense
116,000
Net income
$
4,000
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 (used in) operating activities on the statement of cash flows is determined using the
direct method.
32) Using the direct method, sales adjusted to a cash basis would be:
A) $300,000
B) $302,000
C) $298,000
D) $305,000
33) Using the direct method, the cost of goods sold adjusted to a cash basis would be:
A) $180,000
B) $174,000
C) $177,000
D) $186,000
34) The selling and administrative expense adjusted to a cash basis would be:
A) $120,000
B) $106,000
C) $110,000
D) $112,000
35) The net cash provided by (used in) investing activities would be:
A) $15,000
B) $(10,000)
C) $(8,000)
D) $5,000
36) The net cash provided by (used in) financing activities would be:
A) $(8,000)
B) $(13,000)
C) $20,000
D) $(3,000)
36
The changes in Northrup Corporation’s balance sheet account balances for last year appear
below:
Increases
(Decreases)
Asset and Contra-Asset Accounts:
Cash and cash equivalents
$
4,000
Accounts receivable
$
(4,000)
)
Inventory
$
(2,000
)
Prepaid expenses
$
2,000
Long-term investments
$
40,000
Property, plant and equipment
$
25,000
Accumulated depreciation
$
68,000
Liability and Equity Accounts:
Accounts payable
$
(6,000
)
Accrued liabilities
$
8,000
Income taxes payable
$
(8,000
)
Bonds payable
$
(70,000
)
Common stock
$
10,000
Retained earnings
$
63,000
The company’s income statement for the year appears below:
Income Statement
Sales
$980,000
Cost of goods sold
540,000
Gross margin
440,000
Selling and administrative expense
310,000
Net operating income
130,000
Income taxes
39,000
Net income
$91,000
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 (used in) operating activities.
37) On the statement of cash flows, the sales adjusted to a cash basis would be:
A) $976,000
B) $982,000
C) $984,000
D) $980,000
Sales (as reported)
Adjustments to a cash basis:
Decrease in accounts receivable
Sales adjusted to a cash basis
38) On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be:
A) $546,000
B) $536,000
C) $544,000
D) $540,000
39) On the statement of cash flows, the selling and administrative expense adjusted to a cash
basis would be:
A) $304,000
B) $384,000
C) $310,000
D) $236,000
40) On the statement of cash flows, the income tax expense adjusted to a cash basis would be:
A) $47,000
B) $39,000
C) $31,000
D) $49,000