Los Lobos Corp. uses the direct method to prepare its statement of cash flows. R
ID: 2490891 • Letter: L
Question
Los Lobos Corp. uses the direct method to prepare its statement of cash flows. Relevant balances for Los Lobos at December 31, 2014 and 2013, are as follows.
December 31
2014
2013
$35,050
$32,280
33,500
29,770
31,260
47,300
108,390
97,600
4,260
5,040
249,370
380,650
141,180
172,250
136,410
150,710
3,980
2,720
20,000
60,770
$763,400
$979,090
$1,560
$1,330
17,484
13,980
25,420
16,750
20,290
29,280
5,490
4,030
44,770
20,480
51,830
40,000
9,150
7,430
44,270
64,760
543,136
781,050
$763,400
$979,090
Additional information:
Determine what amounts Los Lobos should report in its statement of cash flows for the year ended December 31, 2014, for the following items.
December 31
Debits2014
2013
Cash$35,050
$32,280
Accounts receivable33,500
29,770
Inventory31,260
47,300
Property, plant, & equipment108,390
97,600
Unamortized bond discount4,260
5,040
Cost of goods sold249,370
380,650
Selling expenses141,180
172,250
General and administrative expenses136,410
150,710
Interest expense3,980
2,720
Income tax expense20,000
60,770
$763,400
$979,090
Credits Allowance for doubtful accounts$1,560
$1,330
Accumulated depreciation—plant assets17,484
13,980
Accounts payable25,420
16,750
Income taxes payable20,290
29,280
Deferred income taxes5,490
4,030
8% callable bonds payable44,770
20,480
Common stock51,830
40,000
Paid-in capital in excess of par9,150
7,430
Retained earnings44,270
64,760
Sales revenue543,136
781,050
$763,400
$979,090
Explanation / Answer
Cash collected from customers (1) Net sales $543,136 (2) minus the increase in Accounts receivable ($3,730) (3) Plus the increase in Provision for bad debt $3,480 TOTAL $542,886 Cash paid to suppliers Cost of goods sold $249,370 Less: Decrease in Inventory -16040 Less: Increase in Accounts Payable -8670 TOTAL $224,660 Cash paid for interest. Interest Expense $3,980 Cash paid for income taxes. Income Tax Exp for 2014 20000 Add: Opening Income Tax Payable 29280 Less: Closing Income Tax Payable -20290 Income tax paid 28990 Cash paid for selling expenses Selling Exp incurred 141180 Less: Non cash exp(Dep) -1168 [17484-13980]/3 Selling Exp Paid 140012
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