Question

1. The data given below are from the accounting records of the Kuhn Corporation:

Net Income (accrual basis)	$	45,000
Depreciation Expense	$	9,000
Decrease in Accounts Payable	$	2,500
Decrease in Inventory	$	3,000
Increase in Bonds Payable	$	10,000
Sale of Common Stock for cash	$	30,000
Increase in Accounts Receivable	$	4,500

Based on this information, the net cash provided by (used in) operating activities using the indirect method would be:

Multiple Choice

• $55,000

• $58,000

• $50,000

• $60,000

2. Hirshberg Corporation's comparative balance sheet appears below:

Comparative Balance Sheet
	Ending Balance			Beginning Balance
Assets:
Current assets:
Cash and cash equivalents	$	42,000		$	31,000
Accounts receivable		22,000			18,000
Inventory		66,000			70,000
Total current assets		130,000			119,000
Property, plant, and equipment		401,000			377,000
Less accumulated depreciation		207,000			177,000
Net property, plant, and equipment		194,000			200,000
Total assets	$	324,000		$	319,000
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable	$	15,000		$	17,000
Accrued liabilities		45,000			38,000
Income taxes payable		53,000			51,000
Total current liabilities		113,000			106,000
Bonds payable		83,000			91,000
Total liabilities		196,000			197,000
Stockholders’ equity:
Common stock		27,000			28,000
Retained earnings		101,000			94,000
Total stockholders’ equity		128,000			122,000
Total liabilities and stockholders' equity	$	324,000		$	319,000

The company's net income for the year was $11,000 and its cash dividends were $4,000. It did not sell or retire any property, plant, and equipment during the year.

The company's net cash provided by (used in) operating activities is:

Multiple Choice

• $48,000

• $18,000

• $40,000

• $52,000

Answer 1

1) The data given below are from the accounting records of the Kuhn Corporation:

Net Income (accrual basis)	$	45,000
Depreciation Expense	$	9,000
Decrease in Accounts Payable	$	-2,500
Decrease in Inventory	$	3,000
Increase in Accounts Receivable	$	-4,500
Net cash flow from operating activities		50000

So answer is c) $50000

2) Calculate following

Cash flow from operating activities
Net income	11000
Depreciation expense	30000
Increase account receivable	-4000
Decrease inventory	4000
Decrease account payable	-2000
Increase accrued liabilities	7000
Increase income tax payable	2000
net cash provided by operating activities	48000

So answer is a) $48000