Problem 13-3A (Direct Method) The income statement for Tremblant Limited is pres
ID: 2557605 • Letter: P
Question
Problem 13-3A (Direct Method) The income statement for Tremblant Limited is presented here: TREMBLANT LIMITED Income Statement Year Ended December 31, 2015 Service revenue Operating expenses Profit from operations Interest expense Profit before income tax Income tax expense Profit $930,400 719,200 211,200 75,770 135,430 36,900 $98,530 Tremblant's statement of financial position contained these comparative data at December 31: 2015 2014 Accounts receivable Prepaid expenses Accounts payable Salaries payable Unearned revenue Interest payable Income tax payable $56,480 12,660 35,800 19,120 12,060 6,750 4,610 $52,630 15,920 41,410 20,050 8,150 4,860 9,090 Additional information: 1. 2. 3. Operating expenses include depreciation expense, $48,860; ? ortization expense, s 15,670; administrative expenses, $120,400; salaries expense, $510,090; and loss on the disposal of equipment, $24,180 Unearned revenue is recelved from customers. Prepaid expenses and accounts payable relate to operating (administrative) expenses.Explanation / Answer
Statement of cash flows (Partial) – Direct method
Cash received from customers
$922640
Cash payments;
Salary paid
$511020
Cash paid for operating expenses
$122750
Cash paid for interest expense
$73880
Cash paid for income tax expense
$41380
Total cash payments
($749030)
Cash flow from operating activities
$173610
Working note;
1. Cash received from cutomers will be calculated as follow;
Sales revenue
$930400
Add: Beginning balance of accounts receivable
$52630
Less: Ending balance of accounts receivable
($56480)
Add: Beginning unearned revenue
$8150
Less: Ending balance of unearned revenue
($12060)
Cash received from cutomers
$922640
2. Cash paid for salaries expenses will be calculated as follow;
Salaries expenses
$510090
Add: Beginning balance of salary payable
$20050
Less: Ending balance of salary payable
($19120)
Cash paid for salary expenses
$511020
3. Cash paid for operating expenses will be calculated as follow;
Operating expenses (Except depreciation, amortization, salary expense and loss on disposal)
$120400
Add: Beginning balance of accounts payable
$41410
Less: Ending balance of accounts payable
($35800)
Add: Ending balance of prepaid expenses
$12660
Less: Beginning balance of prepaid expenses
($15920)
Cash paid for operating expenses
$122750
4. Cash paid for interest expenses will be calculated as follow;
Interest expense
$75770
Add: Beginning balance of interest payable
$4860
Less: Ending balance of interest payable
($6750)
Cash paid for interest expenses
$73880
5. Cash paid for income tax expense will be calculated as follow;
Income tax expense
$36900
Add: Beginning balance of income tax payable
$9090
Less: Ending balance of income tax payable
($4610)
Cash paid for income tax expenses
$41380
Statement of cash flows (Partial) – Direct method
Cash received from customers
$922640
Cash payments;
Salary paid
$511020
Cash paid for operating expenses
$122750
Cash paid for interest expense
$73880
Cash paid for income tax expense
$41380
Total cash payments
($749030)
Cash flow from operating activities
$173610