Scribd
Upload
175 views2 pages

FINMAN Cash-Flow-Analysis-Practice-Problem-2

The ABC Company had a net income of P91,000 last year. Their balance sheet accounts changed as follows: cash increased by P19,000, accounts receivable increased by P13,000, inventory decreased by P16,000, and long-term investments and plant & equipment increased by P10,000 and P70,000 respectively. The company declared a P4,000 cash dividend.

Uploaded by

stel mari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
175 views2 pages

FINMAN Cash-Flow-Analysis-Practice-Problem-2

The ABC Company had a net income of P91,000 last year. Their balance sheet accounts changed as follows: cash increased by P19,000, accounts receivable increased by P13,000, inventory decreased by P16,000, and long-term investments and plant & equipment increased by P10,000 and P70,000 respectively. The company declared a P4,000 cash dividend.

Uploaded by

stel mari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

The ABC Company’s net income last year was P91,000.

Changes in the company's balance sheet accounts for


the year appear below:

Increases
(Decreases)
Debit balances:
Cash ........................................................... P19,000
Accounts receivable .................................. P13,000
Inventory ................................................... P(16,000)
Prepaid expenses ....................................... P4,000
Long-term investments.............................. P10,000
Plant and equipment .................................. P70,000

Credit balances:
Accumulated depreciation ......................... P31,000
Accounts payable ...................................... P(18,000)
Accrued liabilities ..................................... P16,000
Taxes payable ............................................ P(4,000)
Bonds payable ........................................... P(60,000)
Deferred taxes ........................................... P8,000
Common stock .......................................... P40,000
Retained earnings ...................................... P87,000

The company declared and paid cash dividends of P4,000 last year.

Required:
a. Construct in good form the operating activities section of the company's statement of cash flows for
the year. (Use the indirect method.)
b. Construct in good form the investing activities section of the company's statement of cash flows for
the year.
c. Construct in good form the financing activities section of the company's statement of cash flows for
the year.

Answer:

a. Operating activities:
Net income .......................................................... P 91,000
Adjustments:
Depreciation charges ........................................ P31,000
Increase in accounts receivable ........................ (13,000)
Decrease in inventory ...................................... 16,000
Increase in prepaid expenses ............................ (4,000)
Decrease in accounts payable .......................... (18,000)
Increase in accrued liabilities ........................... 16,000
Decrease in taxes payable ................................ (4,000)
Increase in deferred taxes................................. 8,000 32,000
Net cash provided by operating activities ........... P123,000

b. Investing activities:
Increase in long-term investments ................... P(10,000)
Increase in plant & equipment ......................... (70,000)
Net cash used for investing activities .................. P(80,000)

c. Financing activities:
Decrease in bonds payable ............................... P(60,000)
Increase in common stock ................................ 40,000
Cash dividends ................................................. (4,000)
Net cash used in financing activities ................... P(24,000)

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy