Exercise NO: 9

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 follow

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.December 31 2014 2013

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Debits

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Cash $ 35,000 $ 32,000

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Accounts receivable 33,000 30,000

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Inventory 31,000 47,000

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Property, plant, and equipment 100,000 95,000

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Unamortized bond discount 4,500 5,000

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Cost of goods sold 250,000 380,000

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Selling expenses 141,500 172,000

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General and administrative expenses 137,000 151,300

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Interest expense 4,300 2,600

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Income tax expense 20,400 61,200

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$756,700 $976,100

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Credits

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Allowance for doubtful accounts $ 1,300 $ 1,100

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Accumulated depreciation—plant assets 16,500 15,000

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Accounts payable 25,000 15,500

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Income taxes payable 21,000 29,100

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Deferred tax liability 5,300 4,600

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8% callable bonds payable 45,000 20,000

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Common stock 50,000 40,000

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Paid-in capital in excess of par 9,100 7,500

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Retained earnings 44,700 64,600

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Sales revenue 538,800 778,700

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$756,700 $976,100

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Additional information:

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1. Los Lobos purchased $5,000 in equipment during 2014.

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2. Los Lobos allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses.

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3. Bad debt expense for 2014 was $5,000, and write-offs of uncollectible accounts totaled $4,800.

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Instructions

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Determine what amounts Los Lobos should report in its statement of cash flows for the year ended December 31, 2014, for the following items.

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(a) Cash collected from customers. (d) Cash paid for income taxes.

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(b) Cash paid to suppliers. (e) Cash paid for selling expenses.

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(c) Cash paid for interest.

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