Question

Bonita Corp. uses the direct method to prepare its statement of cash flows. Bonita trial balances at December 31, 2017 and 2016, are as follows. December 31 Debits 2017 2016 Cash Accounts receivable Inventory Property, plant, & equipment Unamortized bond discount Cost of goods sold Selling expenses General and administrative expenses Interest expense Income tax expense $34,700 32,800 31,200 99,300 4,500 249,900 142,500 135,600 4,400 20,300 $755,200 $31,900 29,900 46,800 94,400 5,000 380,000 173,600 151,500 2,600 61,700 $977,400

Answer 1

Bonita Corp. a.Sales revenue Deduct: Increase in accounts receivable, net of write-offs [$32,800 -($29,900 - $4,700)] Cash collected from customers 537300 7600 529700 b.Cost of goods sold Deduct: Decrease in inventory ($46,800 - $31,200) Purchases Deduct: Increase in accounts payable ($25,100 - $15,700) Cash payments to suppliers 249900 15600 234300 9400 224900 c.Interest expense Deduct: Decrease in unamortized bond discount ($5,000 - $4,500) Cash paid for interest 4400 500 3900 d.Income tax expense Add: Decrease in income taxes payable ($28,800 - $21,000) Deduct: Increase in deferred tax liability ($5,300 - $4,600) Cash paid for income taxes 20300 7800 -700 27400 142500 e.Selling expenses Deduct: Depreciation ($1,500* x 1/3) Bad debts expense Cash paid for selling expenses 500 4900 5400 137100