Question

LFM Corporation reported cost of goods sold on its income statement of $15,000. The following account balances appeared on the company's comparative balance sheet for the same year:

	Ending Balance			Beginning Balance
Inventory	$	33,000		$	30,000
Accounts Payable	$	23,000		$	21,000

The company uses the direct method to determine the net cash provided by (used in) operating activities. The cost of goods sold, adjusted to a cash basis, on the company's statement of cash flows for the year would be:

$14,000

$16,000

$10,000

$15,000

Answer 1

Ending inventory Add: Cost of goods sold $ $ $ $ $ 33,000 15,000 48,000 30,000 18,000 Less: Beginning inventory Inventory Purchase Accounts payable beginning balance Add: Inventory purchase $ $ $ $ $ 21,000 18,000 refer workings above 39,000 23,000 16,000 Less: Accounts payable ending balance Net cash used in operating activities Answer is option second - $ 16,000