SCF-Direct Method
Response to the following problem:
Los Lobos Corp. uses the direct method to prepare its statement of cash flows. Los Lobos's trial balances at December 31, 2014 and 2013, are as follows.
|
Debits
|
December 31
|
|
2014
|
2013
|
|
|
|
|
Cash
|
$ 35,000
|
$ 32,000
|
|
Accounts receivable
|
33,000
|
30,000
|
|
Inventory
|
31,000
|
47,000
|
|
Property, plant, and equipment
|
100,000
|
95,000
|
|
Unamortized bond discount
|
4,500
|
5,000
|
|
Cost of goods sold
|
250,000
|
380,000
|
|
Selling expenses
|
141,500
|
172,000
|
|
General and administrative expenses
|
137,000
|
151,300
|
|
Interest expense
|
4,300
|
2,600
|
|
Income tax expense
|
20,400
|
61,200
|
|
|
$756,700
|
$976,100
|
|
Credits
|
|
|
|
Allowance for doubtful accounts
|
$ 1,300
|
$ 1,100
|
|
Accumulated depreciation-plant assets
|
16,500
|
15,000
|
|
Accounts payable
|
25,000
|
15,500
|
|
Income taxes payable
|
21,000
|
29,100
|
|
Deferred tax liability
|
5,300
|
4,600
|
|
8% callable bonds payable
|
45,000
|
20,000
|
|
Common stock
|
50,000
|
40,000
|
|
Paid-in capital in excess of par
|
9,100
|
7,500
|
|
Retained earnings
|
44,700
|
64,600
|
|
Sales revenue
|
538,800
|
778,700
|
| |
$756,700 |
$976,100 |
Additional information:
1. Los Lobos purchased $5,000 in equipment during 2014.
2. Los Lobos allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses.
3. Bad debt expense for 2014 was $5,000, and write-offs of uncollectible accounts totaled $4,800. Instructions
Determine what amounts Los Lobos should report in its statement of cash flows for the year ended December 31, 2014, for the following items.
(a) Cash collected from customers. (d) Cash paid for income taxes.
(b) Cash paid to suppliers. (e) Cash paid for selling expenses.
(c) Cash paid for interest.