STATEMENT OF CASH FLOWS

CASH F LOW FROM OPERATING ACTIVITIES – INDIRECT METHOD

1. Carla Wee Company has net income of P500,000. The following other information pertaining to the
company;
Depreciation expense P300,000
Bad Debts expense 100,000
Investment income from Manelli Company (20% ownership) 20,000
Gain on sale of asset 100,000
Increase in Accounts receivable P30,000
Increase in Accounts payable P40,000
Decrease in accrued expenses P50,000
How much is the cash flow from operating activities?

CASH F LOW FROM OPERATING ACTIVITIES – DIRECT METHOD

2. The following is Deadpool Company’s condensed income statement:
Sales P1,000,000
Cost of Goods Sold P600,000
Gross Profit 400,000
Less: Operating expenses
Depreciation expense 50,000
Bad Debts expense 30,000
Other operating expenses 20,000
Net Income P 300,000
The following are other information pertaining to Deadpool Company:
Increase in accounts receivable P50,000
Increase in allowance for doubtful accounts 20,000
Increase in accounts payable 20,000
Decrease in accrued expenses 10,000
Increase in prepaid expenses 5,000
Decrease in inventory 3,000

Required:
a. Cash received from customers
b. Cash paid to suppliers
c. Cash paid for other operating expenses
d. Cash flow from operating activities

CASH F LOW FROM INVESTING ACTIVITIES

3. Eloquence Company had the following activities during 2012:
-Acquired share capital of another entity for P2,000,000.
-Sold an investment with carrying amount of P2,000,000 for P1,500,000.
-Acquired a P5,000,000 one-year certificate of deposit from a bank. During the year, interest of
P500,000 was received from the bank.
-Collected dividends of P300,000 on share investments.
What amount should be reported as net cash used in investing activities?

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4. Enormous Company provided the following data for 2012:
Gain on sale of equipment 60,000
Proceeds from sale of equipment 100,000
Purchase of bonds with face value of P2,000,000 1,800,000
Amortization of bond discount 20,000
Dividends declared 450,000
Dividends paid 380,000
Proceeds from sale of treasury shares (carrying amount P650,000) 750,000
What amount should be reported as net cash used in investing activities?

CASH F LOW FROM FINANCING ACTIVITIES

5. During 2012, Dreamer Company has the following activities related to its financial operations:
Payment for the early retirement of long-term bonds payable
(carrying amount of bonds payable, P5,000,000) 4,000,000
Payment in 2012 of cash dividend declared in 2011 2,000,000
Preference share capital converted into ordinary share capital 1,000,000
Proceeds from sale of treasury shares (cost, P1,000,000) 1,500,000
What amount should be reported as net cash used in financing activities in 2012?

COMPREHENSIVE ILLUSTRATION
6. Dyna Company provided the following information :
2012 2011
Cash 6,600,000 5,500,000
FAFVPL 2,500,000 -

Accounts receivable 4,800,000 3,200,000

Allowance for doubtful accounts ( 800,000) ( 200,000)
Inventories 5,200,000 7,000,000
Investment in associate 5,400,000 5,000,000
Property, plant and equipment 13,000,000 9,000,000
Accumulated depreciation (3,700,000) (3,200,000)
Patent, net 1,000,000 1,700,000
Accounts payable 5,500,000 5,000,000
Note payable - bank 2,000,000 3,500,000
Bonds payable 3,000,000 -
Share capital, P10 par value 18,000,000 15,000,000
Share premium 1,500,000 1,000,000
Treasury shares at cost ( 500,000) -
Retained earnings 4,500,000 3,500,000
*The net income for 2012 is P6,000,000. Dyna paid a cash dividend of 5,000,000 on October 1, 2012.
*During 2012, Dyna purchased FAFVPL securities for P3,000,000 cash and sold FAFVPL securities costing
P1,000,000 for P1,400,000 cash. On December 31, 2012, the market value of the remaining FAFVPL securities
increased by P500,000. Transactions involving these securities are classified by the company as part of
operating activities.
*On January 1, 2012, Dyna sold equipment costing P1,000,000 with a carrying amount of P600,000 for
P500,000.
*On July 1, 2012, Dyna purchased equipment for P2,000,000 cash.
*On December 31, 2012, Dyna purchased land by issuing bonds payable at face value of P3,000,000.
*On December 31, 2011, Dyna acquired 20% of Guia Company’s share capital for P5,000,000. Guia reported
income of P3,000,000 for 2012 and paid cash dividend of P1,000,000 on December 31, 2012. Dividends
received are classified as operating activities by the company.
I. What is the net cash provided by operating activities?
A. 6,500,000 B. 6,100,000 C. 9,000,000 D. 8,600,000
II. What is the net cash used in investing activities?
A. 1,900,000 B. 1,500,000 C. 3,500,000 D. 4,000,000
III. What is the net cash used in financing activities?
A. 3,500,000 B. 3,100,000 C. 1,000,000 D. 4.000,000

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