Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $ 31,000 $ 28,000

Krech Corporation's comparative balance sheet appears below:


Comparative Balance Sheet


Ending Balance

Beginning Balance

Assets:







Current assets:







Cash and cash equivalents

$

31,000


$

28,000


Accounts receivable


18,000



20,000


Inventory


58,000



56,000


Prepaid expenses


12,000



10,000


Total current assets


119,000



114,000


Property, plant, and equipment


374,000



354,000


Less accumulated depreciation


190,000



165,000


Net property, plant, and equipment


184,000



189,000


Total assets

$

303,000


$

303,000


Liabilities and stockholders' equity:







Current liabilities:







Accounts payable

$

13,000


$

9,000


Accrued liabilities


52,000



53,000


Income taxes payable


67,000



69,000


Total current liabilities


132,000



131,000


Bonds payable


76,000



73,000


Total liabilities


208,000



204,000


Stockholders’ equity:







Common stock


28,000



26,000


Retained earnings


67,000



73,000


Total stockholders’ equity


95,000



99,000


Total liabilities and stockholders' equity

$

303,000


$

303,000



The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.


Which of the following is correct regarding the operating activities section of the statement of cash flows?

a. The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income

b. The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income

c. The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income

d. The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

Step by Step Solution

3.34 Rating (148 Votes )

There are 3 Steps involved in it

Step: 1

The companys net income loss for the year was 3000 and its cash dividends were 30... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Document Format ( 1 attachment)

Word file Icon
6047344854171_744738.docx

120 KBs Word File

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting Chapters 1-30

Authors: John Price, M. David Haddock, Michael Farina

14th edition

978-1259284861, 1259284867, 77862392, 978-0077862398

More Books

Students also viewed these Accounting questions

Question

What is the law of Prgnanz and how can it be illustrated?

Answered: 1 week ago