Los Lobos _cash flows using the direct and indirect methods

1. Los Lobos Ledger Preparation

Review the following information:

                                                                                                12-31-2007                           12-31-2006
Cash                                                                                      $ 35,000                                $ 32,000
Accounts receivable                                                              33,000                                   30,000
Allowance for doubtful accounts                                         (1,300)                                   (1,100)
Inventory                                                                                  31,000                                   47,000
Property, plant, & equipment                                              100,000                                   95,000
Accumulated depreciation                                                                   (16,500)                                (15,000)
Trade accounts payable                                                        (25,000)                               (15,500)
Income taxes payable                                                            (21,000)                               (29,100)
Deferred income taxes                                                            (5,300)                                 (4,600)
8% callable bonds payable                                                    (45,000)                               (20,000)
Unamortized bond discount                                                      4,500                                    5,000
Common stock                                                                         (50,000)                               (40,000)
Additional paid-in capital                                                          (9,100)                                (7,500)
Retained earnings                                                                     (25,200)                              (64,600)
Sales                                                                                           (558,300)                            (778,700)
Cost of goods sold                                                                      250,000                            380,000
Selling expenses                                                                                         141,500                            172,000
General and administrative expenses                                     137,000                           151,300
Interest expense                                                                               4,300                                2,600
Income tax expense                                                                     20,400                              61,200
 $ - $ -

Additional information:
1. Los Lobos purchased $5,000 in equipment during 2007.
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 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
Collections on Receivables 477,900
Purchases (219,500)
Purchase of Equipment (5,000)
Wages (150,700)
Payments to Suppliers (126,300)
Tax Payments (27,800)
Borrowing 30,000
Repayment of Debt (5,000)
Interest Payments (3,800)
Sale of Stock 11,600
Dividends (51,000)

Prepare a statement of cash flows using the direct and indirect methods.
Prepare a classified balance sheet.