Problem: Statement of Cash Flows - Direct Method
Pepperoni Pizza uses the direct method to prepare its statement of cash flows. Pepperoni Pizza's trial balances at December 31, 2014 and 2013, are as follows.
December 31, 2014 2013
Debits
Cash $ 84,000 $ 5,000
Accounts receivable 270,000 298,000
Inventory 187,000 171,000
Property, plant, & equipment 690,000 592,100
Cost of goods sold 1,205,000 1,080,000
Selling expenses 181,500 106,000
G&A expenses 285,000 189,500 Interest expense 8,500 10,200
Income tax expense 170,300 161,800
$3,081,300 $2,613,600
Credits
Allowance for doubtful accounts $ 9,600 $ 8,100 Accumulated depreciation 80,500 65,000
Trade accounts payable 95,000 118,500
Income taxes payable 21,000 8,600
Deferred income taxes 54,200 45,600 Unamortized bond premium 4,500 5,000
10% convertible bonds payable 100,000 100,000 Common stock 110,000 100,000 Additional paid-in capital 75,000 56,000
Retained earnings 425,700 318,300
Sales 2,105,800 1,788,500
$3,081,300 $2,613,600
Additional information:
Pepperoni Pizza purchased a major piece of equipment for $97,900 during 2014. Pepperoni Pizza allocated one-half of its depreciation expense to cost of goods sold and the remainder to general and administrative expenses. Bad debt expense for 2014 was $10,000 and is included in general and administrative expenses.
Determine what amounts Pepperoni Pizza should report in its statement of cash flows for the year ended December 31, 2014, for the following items.
(a) Cash collected from customers.
(b) Cash paid for income taxes.
(c) Cash paid to suppliers.
(d) Cash paid for general and administrative expenses.
(e) Cash paid for interest.