Prepare statement of cash flows—direct method (Learning Objective 4)

20–25 min.

The income statement and additional data of Sunbelt Services, Inc., follow:

Sunbelt Services, Inc.

Income Statement Year Ended September 30, 2014 Revenues:

Sales Revenue Dividend Revenue Total Revenues Expenses:

Cost of Goods Sold Salaries Expense Depreciation Expense Advertising Expense Interest Expense Income Tax Expense Total Expenses Net Income

$313,000 206,000

$107,000

$307,000 6,000

$112,000 56,000 18,000 7,000 1,000 12,000 Additional data follow:

a. Collections from customers are $16,000 more than sales.

b. Payments to suppliers are the sum of cost of goods sold plus advertising expense.

c. Payments to employees are $9,000 more than salaries expense.

d. Dividend revenue, interest expense, and income tax expense equal their cash amounts.

e. Acquisition of fixed assets for cash is $106,000.

f. Proceeds from sale of land total $23,000.

g. Proceeds from issuance of common stock for cash total $37,000.

h. Payment of long-term note payable is $13,000.

i. Payment of dividends is $9,000.

j. Cash balance, September 30, 2013, was $23,000.

Requirement 1. Prepare Sunbelt Services’ statement of cash flows for the year ended September 30, 2014. Use the direct method.

AppendixLO1