NATIONAL COLLEGE OF SCIENCE & TECHNOLOGY

ACCT 047
Updates on Financial Reporting
DATE: November 23, 2020

Sudan Company uses the direct method to prepare its Statement of Cash Flows.
Its TRIAL BALANCES at the end of 2020 and 2019 are below :
2020
DEBITS
Cash 105,000
Accounts Receivable 99,000
Inventory 93,000
Property, Plant & Equipment 300,000
Unamortized Bond Discount 13,500
Cost of Good Sold 750,000
Selling Expenses 424,500
General & Administrative Expenses 411,000
Interest Expense 12,900
Income Tax Expense 61,200
TOTAL 2,270,100

CREDITS
Allowance for Bad Debts 3,900
Accumulated Depreciation 49,500
Accounts Payable - trade 75,000
Income Tax Payable 63,000
Deferred Income Taxes Payable 15,900
8% Bond Payable 135,000
Ordinary Shard Capital 150,000
Share Premium 27,300
Accumulated Profits 134,100
Sales 1,616,400
TOTAL 2,270,100

Additional Data:
1. Sudan purchased P15,000 in equipment during 2020.
2. One-third of Depreciation expense is allocated to selling expenses, and the remaining balance
to general and administrative expenses
3. Bad debts expense for 2020 was P15,000. During the year 2020, uncollectible accounts totaling P14,000
were written off.

REQUIRED:
Compute/Determine the following:
1 Cash collected from customers
2 Cash paid to suppliers
3 Cash paid for interest
4 Cash paid for income taxes
5 Cash paid for Selling Expenses
s on Financial Reporting

2019

96,000
90,000
141,000
285,000
15,000
1,140,000
516,000
453,900
7,800
183,600
2,928,300

3,300
45,000
46,500
87,300
13,800
60,000
120,000
22,500
193,800
2,236,100
2,828,300

ining balance

ccounts totaling P14,000

 Solution:
1.) Cash collected from customers Sales
Less: Increase in accounts receivable, net of write offs (P9,000 + P14,400)
Cash collected from customers

2.) Cash paid to suppliers Cost of goods sold

Less: Decrease in inventory
Purchases
Less: Increase in accounts payable
Cash paid to suppliers

3.) Cash paid for interest Interest expense

Less: Decrease in unamortized bond discount
Cash paid for interest

4.) Cash paid for income taxes Income tax expense

Decrease in income taxes payable
Increase in deferred tax liability
Cash paid for income taxes

5.) Cash paid for selling expenses Selling expenses

Depreciation (P4.500* x 1/3)
Bad debt expense
Cash paid for selling expenses
* increase in accumulated depreciation (49,500-45,000)
P1,616,400
-23,400
P1,593,000

P750,000
-48,000
702,000
-28,500
P673,500

P12,900
-1,500
P11,400

P61,200
24,300
-2,100
P83,400

P424,500
-1,500
-15,000
P408,000