Asked by Jordan Nolte on May 31, 2024
Verified
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 (used in) operating activities on the statement of cash flows is determined using the direct method.The net cash provided by (used in) financing activities would be:
A) $(8,000)
B) $(13,000)
C) $20,000
D) $(3,000)
Financing Activities
Activities that result in changes in the size and composition of the equity capital or borrowings of a company.
Direct Method
A cash flow statement preparation approach where actual cash flow information from the company's operations is used, as opposed to indirect methods which adjust net income.
- Identify the distinctions among operating, investing, and financing activities as they relate to the statement of cash flows.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
A
Explanation :
The net change in cash for the year can be calculated as the increase in total assets ($41,000) minus the increase in total liabilities ($21,000), which equals $20,000. Since there were no sales or retirements of property, plant, and equipment and no dividends paid during the year and the company did not issue any bonds payable or repurchase any of its own common stock, the only financing activity was the increase in long-term debt of $8,000. Therefore, the net cash provided by financing activities is $(8,000) and the answer is A.
Learning Objectives
- Identify the distinctions among operating, investing, and financing activities as they relate to the statement of cash flows.
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