The Change in Each of Kendall Corporation's Balance Sheet Accounts

question 5

Multiple Choice

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 operating activities on the statement of cash flows is determined using the direct method. The selling and administrative expense adjusted to a cash basis would be:

• A)$120,000
• B)$106,000
• C)$110,000
• D)$112,000

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Definitions:

Ending Inventory

The total value of all goods available for sale at the end of an accounting period, not yet sold.

Variable Production Costs

Costs that vary directly with the level of production, such as materials, labor, and utilities needed for manufacturing.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) associated with producing a single unit of a product.