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, the cost of goods sold adjusted to a cash basis would be:
A)$180,000
B)$174,000
C)$177,000
D)$186,000

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, the cost of goods sold adjusted to a cash basis would be:
A)$180,000 
B)$174,000 
C)$177,000 
D)$186,000

Quizplus · Accepted Answer

We can use the formula for calculating cost of goods sold using the direct method, which is: Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory. Plugging in the given values, we get: Cost of Goods Sold = $63,000 + $267,000 - $144,000 = $186,000. Therefore, the correct choice is D.

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