The comparative balance sheets for Rayco, Inc., are presented below:
|
|
Ending |
Beginning |
|
Cash |
$ 20,000 |
$ 15,000 |
|
Accounts receivable (net) |
27,000 |
25,000 |
|
Inventory |
32,000 |
35,000 |
|
Prepaid expenses |
8,000 |
5,000 |
|
Long term investments |
36,000 |
38,000 |
|
Plant and equipment |
108,000 |
92,000 |
|
Accumulated depreciation |
(49,000) |
(30,000) |
|
Total assets |
$182,000 |
$180,000 |
|
Accounts payable |
$ 30,000 |
$ 38,000 |
|
Notes payable |
40,000 |
32,000 |
|
Deferred income taxes |
17,000 |
35,000 |
|
Common stock |
45,000 |
40,000 |
|
Retained earnings |
50,000 |
35,000 |
|
Total liabilities and stock holders equity |
$182,000 |
$180,000 |
Rayco, Inc., reported the following net income for the year:
|
Sales |
$200,000 |
|
Less cost of goods sold |
100,000 |
|
Gross margin |
100,000 |
|
Less operating expenses |
52,000 |
|
Net operating income |
48,000 |
|
Gain on sale of investments |
2,000 |
|
Income before taxes |
50,000 |
|
Less income taxes |
20,000 |
|
Net income |
$ 30,000 |
There were no sales or retirements of plant and equipment during the year. Dividends paid to shareholders totaled $15,000. 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 the cash basis would be:
A) $202,000
B) $198,000
C) $200,000
D) $210,000
2. Using the direct method, cost of goods sold adjusted to the cash basis would be:
A) $95,000
B) $100,000
C) $105,000
D) $108,000
3. The income tax expense adjusted to the cash basis would be:
A) $18,000
B) $2,000
C) $20,000
D) $38,000
4. The net cash provided by operating activities would be:
A) $37,000
B) $39,000
C) $30,000
D) $19,000
5. The net cash provided by financing activities would be:
A) $(2,000)
B) $(10,000)
C) $(15,000)
D) $5,000
6. The net cash provided by investing activities would be:
A) $(4,000)
B) $(12,000)
C) $(16,000)
D) $4,000