STATEMENT OF CASH FLOWS EXERCISE
Problem 1
Statement of Cash Flows
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Cash received from sale of a building
Cash paid for salaries
Cash received for interest on a note receivable
Cash paid to acquire a new truck
Cash loaned out to a customer in the form of a long-term note
Cash received for services rendered
Cash paid for interest
Cash paid for insurance on equipment
Cash received from a debtor representing payments of principal
Cash paid out to acquire a building
Required:
Categorize each cash flow as (O) for operating, (I) for investing, or (F) for financing.
Problem 2
Cash Flows from Operating Activities-Indirect Method
Imara Andam Business Solutions had a profit of P330,000 in 2019. During the year, the entity
had depreciation expense of P70,000. Accounts receivable increased by P110,000 and accounts
payable increased by P50,000. The entity started operations in 2019 and the foregoing are the
entity’s only current assets and current liabilities.
Required:
Determine the net cash flows from operating activities using the indirect method.
Problem 3
Classifications of Events on Statement of Cash Flows
The following transactions pertain to the operations of Party Consultants, an events planning
entity owned by Eleanor Tan. The entity had the following transactions during the month:
1. Received a P180,000 cash investment from the owner.
2. Provided P400,000 services on account
3. Incurred P220,000 of operating expenses on account
4. Collected P320,000 cash from accounts receivable
5.
6.
7.
8.
Allowed a P30,000 cash withdrawal to the owner of the business
Paid P160,000 cash on accounts payable
Performed services for P30,000 cash
Paid P12,000 cash for expenses
Required:
1. Classify each of these transactions as a cash flow from operating activities (OA),
investing activities (IA), or financing activities (FA). Transactions that do not affect
the statement of cash flows should be identified as “n/a”
2. Prepare a statement of cash flows.
Problem 4
The following data are taken from the records of Howa Company for the year 2009.
Cash received
From customers
Proceeds of Bank Loan
Additional Investment of Howa
Proceeds of sale of equipment
Dividends on stock investments
Interest Income
Commissions Income
Cash paid
Operating expenses
Principal of Bank Loan
Withdrawal of Howa
Interest on bank loan
Purchase of furniture
Taxes and licenses
Cash balance on January 1, 2009 is P555,000.
Required: Prepare a statement of cash flows.
P 500,000
800,000
125,000
35,000
5,000
2,300
10,000
195,000
200,000
40,000
4,000
18,000
5,600
Problem 5
The following data are taken from the records of Kiwi Pot Company for the year 2010.
Collections from customers
P 1,750,000
Provision for bad Debts
7,000
Additional Investment of Kiwi
250,000
Withdrawal of Kiwi
225,000
Dividends on stock investments received
15,000
Interest Income received
7,800
Taxes and licenses paid
6,000
Operating expenses paid
305,000
Commissions Income received
20,000
Principal of Bank Loan paid
500,000
Interest on bank loan paid
15,000
Proceeds from sale of Equipment
45,000
Cash purchase of building
1,000,000
Proceeds of Bank Loan
670,000
Depreciation Expense
25,000
Cash balance on January 1, 2009 is P99,000.
Required: Prepare a statement of cash flows.
Portions of the financial statements for Myriad Products are provided below.
Problem 6
MYRIAD PRODUCTS COMPANY
Income Statement
For the Year Ended December 31, 2011
($ in millions)
Sales
Cost of goods sold
Gross margin
Salaries expense
Depreciation expense
Patent amortization expense
Interest expense
Loss on sale of investments
Income before taxes and extraordinary
$660
(250)
410
$110
90
5
20
3
(228)
182
loss
Income tax expense
Income before extraordinary loss
Extraordinary loss (earthquake)
Less: Tax savings
Net Income
(91)
91
10
(5)
5
$ 86
MYRIAD PRODUCTS COMPANY
Selected Accounts from Corporative Balance Sheets
December 31, 2011 and 2010
($ in millions)
Year
2011
2010
Cash
$102
$100
Accounts receivable
220
232
Inventory
440
450
Accounts payable
140
134
Salaries payable
80
86
Interest payable
25
20
Income taxes
15
10
payable
Change
$ 2
(12)
(10)
6
(6)
5
5
Required:
1. Prepare the cash flows from operating activities section of the statement of cash
flows for Myriad Products Company using the direct method.
2. Prepare the cash flows from operating activities section of the statement of cash
flows for Myriad Products Company using the indirect method.