1. Comparative balance sheet accounts of Marcus Inc. are presented below.
MARCUS INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2014 AND 2013
December 31
Debit Accounts
2014
2013
Cash
$41,860
$34,110
Accounts Receivable
70,880
59,550
Inventory
29,220
24,910
Investments (available-for-sale)
22,210
38,740
Machinery
29,900
19,010
Buildings
67,730
56,600
Land
7,050
7,050
$268,850
$239,970
Credit AccountsAllowance for Doubtful Accounts
$2,050
$1,360
Accumulated Depreciation—Machinery
6,330
1,970
Accumulated Depreciation—Buildings
14,400
8,960
Accounts Payable
35,600
24,730
Accrued Payables
3,142
2,783
Long-Term Notes Payable
21,340
31,250
Common Stock, no-par
149,400
124,900
Retained Earnings
36,588
44,017
$268,850
$239,970
Additional data (ignoring taxes):
1.Net income for the year was $38,011.2.Cash dividends declared and paid during the year were $20,940.3.A 20% stock dividend was declared during the year. $24,500 of retained earnings was capitalized.4.Investments that cost $25,480 were sold during the year for $28,640.5.Machinery that cost $3,710, on which $701 of depreciation had accumulated, was sold for $2,189.
Marcus’s 2014 income statement follows (ignoring taxes).
Sales revenue
$535,761
Less: Cost of goods sold
379,790
Gross margin
155,971
Less: Operating expenses (includes $10,501 depreciation and $5,170 bad debts)
120,300
Income from operations
35,671
Other: Gain on sale of investments
$3,160
Loss on sale of machinery
(820
)
2,340
Net income
$38,011
(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Net cash flow from operating activities
(b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)Must show work “Excel”
2. 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
Debits
2014
2013
Cash
$34,600
$31,710
Accounts receivable
32,910
29,500
Inventory
30,820
46,840
Property, plant, & equipment
106,730
92,800
Unamortized bond discount
4,310
5,490
Cost of goods sold
252,550
380,640
Selling expenses
141,020
172,870
General and administrative expenses
136,940
151,430
Interest expense
3,920
2,170
Income tax expense
20,740
61,490
$764,540
$974,940
CreditsAllowance for doubtful accounts
$1,960
$1,030
Accumulated depreciation—plant assets
16,695
13,590
Accounts payable
24,660
16,650
Income taxes payable
19,880
28,790
Deferred income taxes
5,200
4,030
8% callable bonds payable
45,160
21,420
Common stock
52,180
40,700
Paid-in capital in excess of par
9,360
7,930
Retained earnings
44,670
64,270
Sales revenue
544,775
776,530
$764,540
$974,940
Additional information:
1.Los Lobos purchased $13,930 in equipment during 2014.2.Los Lobos allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses.3.Bad debt expense for 2014 was $4,890, and write-offs of uncollectible accounts totaled $3,960.
Determine what amounts Los Lobos 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 to suppliers. (c)Cash paid for interest. (d)Cash paid for income taxes. (e)Cash paid for selling expenses. Must show work
