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. Using the direct method,sales adjusted to a cash basis would be:
A)$300,000
B)$302,000
C)$298,000
D)$305,000

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. Using the direct method,sales adjusted to a cash basis would be:
A)$300,000 
B)$302,000 
C)$298,000 
D)$305,000

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities using the direct method, we need to adjust the income statement items to a cash basis. For sales, we need to subtract the increase in accounts receivable and add the decrease in accounts receivable as follows:

Sales - Increase in accounts receivable + Decrease in accounts receivable = Adjusted sales

$400,000 - $18,000 + $20,000 = $402,000

However, we are asked to determine the sales adjusted to a cash basis, which means we need to subtract the increase in accounts receivable from the original sales:

$400,000 - $18,000 = $382,000

Therefore, the correct answer is C) $298,000.

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