Increase in prepaid insurance 180000 increase in

Info icon This preview shows pages 3–6. Sign up to view the full content.

Increase in prepaid insurance (180,000) Increase in salaries payable 100,000 Cash generated from operations P800,00 0 Income taxes paid (252,000) Interest paid paid (175,00 0 Net cash from operating activities P373,00 0 5-5. Items that would be reported in the Statement of Cash Flows (indirect method) 1. Depreciation expense of P120,000 is added to profit before income taxes. 2. Net gain of P5,000 from sale of machine is deducted from profit before income taxes. (Gain of P9,000 from sale of machine A less loss of P4,000 from sale of machine B). 3. Under investing activities section, P29,000 is reported as a cash inflow of sale of machine (27,000 from machine A plus P2,000 from machine B). 4. Under investing activities, P250,000 is reported as a cash outflow for purchase of machine.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

28
Image of page 4
Chapter 5 – The Statement of Cash Flows 5-6. (DOLLAR COMPANY) (Indirect method) Dollar Company Statement of Cash Flows For year ended December 31, 2012 Cash flows from operating activities Profit P580,000 Adjustments for Depreciation expense 290,00 0 Operating income before working capital changes P870,000 Decrease in accounts receivable 110,000 Increase in inventory (200,000) Decrease in accounts payable (90,000 ) Net cash from operating activities P690,000 Cash flows from investing activities Purchase of equipment (880,000) Cash flows from financing activities Issue of ordinary share capital P550,00 0 Cash dividends paid (260,000) 290,000 Net increase in cash P100,000 Add cash balance, January 1 42,000 Cash balance, December 31 P142,000 5-7. (EURO COMPANY) Euro Company Statement of Cash Flows For year ended December 31, 2012 Cash flows from operating activities Profit before income taxes P2,955,00 0 Adjustments for Depreciation expense 750,000 Gain on sale of plant assets (300,000) Interest expense 100,00 0 Income before working capital changes P3,505,00 0 Increase in accounts receivable (600,000) Increase in inventories (150,000) Increase in prepaid rent (6,000) Decrease in accounts payable (285,000) Increase in salaries payable 120,00 0 Cash generated from operations P2,584,00 0 Interest paid ( 80,000) Income taxes paid (281,800) P2,222,20 0 Cash flows from investing activities Proceeds from sale of plant assets P 800,000 Payments for purchase of plant assets (7,600,000) Payments for purchase of investment in associate (4,000,000) (10,800,000) Cash flows from financing activities Receipts from issuance of ordinary share capital P5,000,00 0 Receipts from issuance of notes 6,000,000
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern