Preparation of Los Lobos Balance Sheet, Cash Flows Statements, and Income Statement

ACC/545 Financial Reporting

Preparation of Los Lobos Balance Sheet, Cash Flows Statements, and Income Statement

Los Lobos Ledger Preparation

Review the following information:

31-Dec2007

Cash $35,000 Accounts receivable 33,000Allocation for uncertain balances -1,300Stock 31,000Property, factory, & machines 100,000Built up wear and tear -16,500Trade accounts payable -25,000Income taxes due -21,000Delayed income taxes -5,3008% callable bonds due -45,000Unamortized bond discount 4,500General inventory -50,000Additional paid-in capital -9,100Saved income -25,200

Sales $ (558,300)Value of items sold 250,000Selling expenditures 141,500General and admin expenditures 137,000Interest expenditure 4,300Income tax expenditure 20,400Net Income $ (5,100)

Additional information: 1. Los Lobos bought $5,000 in equipment in 2007. 2. Los Lobos allted one-third of its wear and tear expenditure to selling expenditures and the balance to general and admin expenditures. 3. Bad debt expenditure for 2007 was $5,000, and write-offs of uncollectible accounts totaled $4,800. 4. $12, 000 of the debt is current portion.

Cash Sales $72,600

477,900Collections on ReceivablesPurchases -219,500

Buying of Machines -5,000Salaries -150,700Payments to Vendors -126,300Tax Payments -27,800

30,000LoansRepayment of Debt -5,000Interest Payments -3,800

11,600Sale of InventoryDividends -51,000

Prepare a statement of cash flows using the direct and indirect methods. Prepare a classified balance sheet.Calculate amounts to be reported for current assets.Calculate amounts to be reported for current liabilities

31-Dec2006 Change

$32,000 30,000 3,000 Increase-1,100 -200 Increase47,000 -16,000 Decrease95,000 5,000 Increase

-15,000 -1,500 Decrease-15,500 -9,500 Increase-29,100 8,100 Decrease

-4,600 -700 Increase-20,000 -25,000 Increase

5,000 -500 Decrease-40,000 -10,000 Increase

-7,500 -1,600 Increase-64,600 39,400 Decrease

$ (778,700)380,000172,000151,300

2,60061,200

$ (11,600)

2. Los Lobos allted one-third of its wear and tear expenditure to selling expenditures and

3. Bad debt expenditure for 2007 was $5,000, and write-offs of uncollectible accounts

a statement of cash flows using the direct and indirect methods.

Prepare a statement of cash flows, Direct and Indirect

Los Lobos, Inc. Los Lobos, Inc.Statement of Cash Flows (Direct Method) Statement of Cash Flows (Indirect Method)

12/31/2007 12/31/2007

Operating Activities Net IncomeAdjustments :

Cash Sales $ 72,600.00 Increase Accounts ReceivableRecovery on Receivables 477,900.00 Decrease in StockPurchases (219,500.00) Wear and tear ExpenditureSalaries (150,700.00) Increase in Accounts DuePayments to Vendors (126,300.00) Decrease in Income Tax DueTax Payments (27,800.00) Increase in Delayed Tax DueInterest Payments (3,800.00) Decrease in Unamortized Bond Discount

Total Cash Flows from Operating Activities $ 22,400.00 Total Cash Flows from Operating Activities

Investing Activities Investing ActivitiesBuying of Machines $ (5,000.00) Purchase of Equipment

Total Cash Flows from Investing Activities $ (5,000.00) Total Cash Flows from Investing Activities

Funding Activities Financing ActivitiesLoans $ 30,000.00 LoansRepayment of Loan (5,000.00) Repayment of LoanSale of Inventory 11,600.00 Sale of InventoryDividends (51,000.00) Dividends

Total Cash Flows from Funding Activities (14,400.00) Total Cash Flows from Funding Activities

Total Cash Flows $ 3,000.00 Total Cash Flows

Los Lobos, Inc.Statement of Cash Flows (Indirect Method)

12/31/2007

$ 5,100.00 Adjustments :

Increase Accounts Receivable (2,800.00) Decrease in Stock 16,000.00 Wear and tear Expenditure 1,500.00 Increase in Accounts Due 9,500.00 Decrease in Income Tax Due (8,100.00) Increase in Delayed Tax Due 700.00 Decrease in Unamortized Bond Discount 500.00 Total Cash Flows from Operating Activities $ 22,400.00

Investing ActivitiesPurchase of Equipment $ (5,000.00)

Total Cash Flows from Investing Activities $ (5,000.00)

Financing Activities $ 30,000.00

Repayment of Loan (5,000.00)Sale of Inventory 11,600.00 Dividends (51,000.00)

Total Cash Flows from Funding Activities (14,400.00)

Total Cash Flows $ 3,000.00

Los LobosIncome Statement

For The Year Ended 12/31/2007

Income (Sales) $ 558,300.00

Cost of Goods Sold $ 250,000.00 Selling Expenditures $ 141,500.00 General & Admin Expenditures $ 137,000.00 Interest Expenditures $ 4,300.00 $ 532,800.00 Income Before Income Taxes $ 25,500.00

Income Tax Expenditures $ 20,400.00

Net Profit $ 5,100.00

Los LobosClassified Balance Sheet

As of 12/31/2007

ASSETSExisting Assets

Cash $ 35,000.00 Accounts Receivable $ 33,000.00 Allocation for Uncertain Balance $ (1,300.00) $ 31,700.00 Stock $ 31,000.00

Total Existing Assets $ 97,700.00

Long-Term Assets Property, Factory, Machines $ 100,000.00 Biult up Wear and tear $ (16,500.00)

Total Long-Term Assets $ 83,500.00

Total Assets $ 181,200.00

LIABILITIES AND STOCKHOLDERS' EQUITY:

Exissting Debts Trade Accounts Due $ 25,000.00 Income Taxes Due $ 21,000.00 Delayed Income Taxes $ 5,300.00 Bonds Due $ 12,000.00

Total Present Debts $ 63,300.00

Long Term Debts Bonds Due $ 33,000.00 Unamortized Bond Discount $ (4,500.00) $ 28,500.00

Total Debts $ 91,800.00

Stockholders' Equity Ordinary shares $ 50,000.00 Additional paid-in capital $ 9,100.00 Saved income $ 30,300.00

Total Stockholders' Equity $ 89,400.00

Total Debts and Stockholders Equity $ 181,200.00