Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: Comparative Balance Sheet Ending Balance Beginning Balance Cash and cash equivalents $ 58,000 $ 34,000 Accounts receivable 48,000 36,000 Inventory 56,000 67,000 Prepaid expenses 24,000 16,000 Long-term investments 280,000 220,000 Property, plant and equipment 580,000 580,000 Less accumulated depreciation 270,000 235,000 Total assets $ 776,000 $ 718,000 Accounts payable $ 32,000 $ 53,000 Accrued liabilities 38,000 21,000 Income taxes payable 61,000 31,000 Bonds payable 90,000 120,000 Common stock 80,000 60,000 Retained earnings 475,000 433,000 Total liabilities and stockholders’ equity $ 776,000 $ 718,000 Income Statement Sales $ 700,000 Cost of goods sold 360,000 Gross margin 340,000 Selling and administrative expense 210,000 Net operating income 130,000 Income taxes 39,000 Net income $ 91,000 The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire 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 selling and administrative expense adjusted to a cash basis would be:

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 11MCQ: Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital...

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Question

Van Beeber Corporation's comparative balance sheet and income statement for last year appear below:

	Ending Balance	Beginning Balance
Comparative Balance Sheet
Cash and cash equivalents	$ 58,000	$ 34,000
Accounts receivable	48,000	36,000
Inventory	56,000	67,000
Prepaid expenses	24,000	16,000
Long-term investments	280,000	220,000
Property, plant and equipment	580,000	580,000
Less accumulated depreciation	270,000	235,000
Total assets	$ 776,000	$ 718,000
Accounts payable	$ 32,000	$ 53,000
Accrued liabilities	38,000	21,000
Income taxes payable	61,000	31,000
Bonds payable	90,000	120,000
Common stock	80,000	60,000
Retained earnings	475,000	433,000
Total liabilities and stockholders’ equity	$ 776,000	$ 718,000

Income Statement
Sales	$ 700,000
Cost of goods sold	360,000
Gross margin	340,000
Selling and administrative expense	210,000
Net operating income	130,000
Income taxes	39,000
Net income	$ 91,000

The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire 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 selling and administrative expense adjusted to a cash basis would be:

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