Determining Operating Cash Flows—Direct Method
Adjusted trial balances for Garboz Company, an industrial recycler, at December 31, 2020, and 2019, follow.
Debits December 31 2020 2019
Cash $38,200 $35,000
Accounts receivable 30,250 27,500
Inventory 29,680 45,000
Property, plant, & equipment 70,000 75,000
unamortized bond discount 3,600 4,000
Cost of goods sold 210,000 340,000
Selling expenses 118,000 140,000
General and admnistrative expenses 100,100 130,000
Interest expense 4,135 2,500
Income tax expense 14,400 41,200
Credits Allowance for uncollectible accounts 1,100 1,000
accumilated depreciation 10,500 12,000
Trade accounts payable 22,000 15,500
Income Taxes payable 18,000 24,100
Deffered income taxes 6,000 4,000
8% callable bonds payable 35,000 18,000
common stock 38,000 22,000
Additional paid in capital 8,100 6,500
Retained earnings 52,500 47,500
sales 427,165 689,600
total cresits $618,365 $840,200
Additional information
1. Purchased $5,000 of equipment in 2020. 2. Allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses. 3. Assume no accounts receivable were written off or recovered during the year.