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

 

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)