Question 7 (Statement of Cash Flows Direct Method)

Pepperoni Pizza uses the direct method to prepare its statement of cash flows. Pepperoni Pizzas trial balances at December 31, 2014 and 2013, are as follows.

December 31, 2014 2013

Debits

Cash $ 84,000 $ 5,000

Accounts receivable 270,000 298,000

Inventory 187,000 171,000

Property, plant, & equipment 690,000 592,100

Cost of goods sold 1,205,000 1,080,000

Selling expenses 181,500 106,000

G&A expenses 285,000 189,500

Interest expense 8,500 10,200

Income tax expense 170,300 161,800

$3,081,300 $2,613,600

Credits

Allowance for doubtful accounts $ 9,600 $ 8,100

Accumulated depreciation 80,500 65,000

Trade accounts payable 95,000 118,500

Income taxes payable 21,000 8,600

Deferred income taxes 54,200 45,600

Unamortized bond premium 4,500 5,000

10% convertible bonds payable 100,000 100,000

Common stock 110,000 100,000

Additional paid-in capital 75,000 56,000

Retained earnings 425,700 318,300

Sales 2,105,800 1,788,500

$3,081,300 $2,613,600

Additional information:

Pepperoni Pizza purchased a major piece of equipment for $97,900 during 2014. Pepperoni Pizza allocated one-half of its depreciation expense to cost of goods sold and the remainder to general and administrative expenses. Bad debt expense for 2014 was $10,000 and is included in general and administrative expenses.

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

a. Cash collected from customers.

b. Cash paid for income taxes.

c. Cash paid to suppliers.

d. Cash paid for general and administrative expenses.

e. Cash paid for interest.