The changes in Northrup Corporation's balance sheet account balances for last year appear below: The company's income statement for the year appears below:
The company declared and paid $18,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by (used in) operating activities.On the statement of cash flows, the sales adjusted to a cash basis would be:
A) $567,000
B) $792,000
C) $786,000
D) $828,600

Question

The changes in Northrup Corporation's balance sheet account balances for last year appear below:  The company's income statement for the year appears below:
 The company declared and paid $18,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by (used in) operating activities.On the statement of cash flows, the sales adjusted to a cash basis would be:
A) $567,000 
B) $792,000 
C) $786,000 
D) $828,600

Quizplus · Accepted Answer

To adjust sales to a cash basis, we need to add the decrease in accounts receivable to sales and subtract the increase in accounts payable and the increase in accrued expenses payable from the sum.

Adjusted Sales = Sales + Decrease in Accounts Receivable - Increase in Accounts Payable - Increase in Accrued Expenses Payable

= $720,000 + ($30,000 - $10,000) - ($36,000 - $30,000) - ($12,000 - $8,000)

= $786,000

Therefore, the answer is C.

The Changes in Northrup Corporation's Balance Sheet Account Balances for Last