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. The net cash provided (used) by financing activities would be:
A)($8,000)
B)($13,000)
C)$20,000
D)($3,000)

Question

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. The net cash provided (used) by financing activities would be:
A)($8,000) 
B)($13,000) 
C)$20,000 
D)($3,000)

Quizplus · Accepted Answer

The net cash provided by operating activities can be calculated using the direct method as follows:

Cash received from customers: $300,000
Cash paid for expenses: ($270,000)
Net cash provided by operating activities: $30,000

Since there were no sales or retirements of property, plant, and equipment and no dividends paid during the year, the net cash provided (used) by financing activities can be calculated as follows:

Net increase in long-term debt: ($8,000)
Net increase in common stock: $0
Net cash provided (used) by financing activities: ($8,000)

Therefore, the best choice is A) ($8,000).

The Change in Each of Kendall Corporation's Balance Sheet Accounts