using the direct method operating expense adjusted to a cash basis was 641402

The change in each of Klondike Company”s balance sheet accounts appears below:

Don't use plagiarized sources. Get Your Custom Essay on using the direct method operating expense adjusted to a cash basis was 641402 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Order Essay	Increase	Decrease
Cash	4,000
Accounts receivable	5,000
Inventory		6,000
Prepaid expenses	3,000
Long term investments		17,000
Plant and equipment	11,000
Accumulated depreciation	9,000
Accounts payable		8,000
Accrued liabilities	5,000
Bonds payable		12,000
Common stock	3,000
Retained earnings.	3,000

Klondike Company’s income statement for the year appears below:

Sales	$350,000
Cost of goods sold	190,000
Gross margin	160,000
Operating expense	157,000
Net income	$ 3,000

There were no sales or retirements of plant and equipment and no dividends paid during the year. The company pays no income taxes.

The company uses the direct method for determining the net cash provided by operating activities on its statement of cash flows.

1. Using the direct method, sales adjusted to a cash basis was:

A) $345,000

B) $350,000

C) $355,000

D) $359,000

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

A) $190,000

B) $192,000

C) $188,000

D) $184,000

3. Using the direct method, operating expense adjusted to a cash basis was:

A) $168,000

B) $155,000

C) $146,000

D) $148,000

4. The net cash provided (used) by investing activities was:

A) $(6,000)

B) $11,000

C) $(11,000)

D) $6,000

5. The net cash provided (used) by financing activities was:

A) $(9,000)

B) $(12,000)

C) $20,000

D) $(3,000)

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