STATEMENT OF

CASH FLOWS
 Operating
Statement
of Cash Investing
Flows
Financing
Operating Investing Financing

Current Liabilities
Current Assets
Operating Investing Financing

Noncurrent Assets
Operating Investing Financing

Noncurrent
Liabilities

EQUITY
 Guidelines
Statement of Comprehensive Income
Net Income/(Net Loss)
Operating
Non-cash items
Depreciation (+) Gains (-)
Amortization (+) Losses (+)
Doubtful accounts (+)
Statement of Financial Position
Current Assets (take note of All. for Doubtful Accounts)
Increase (-) Decrease (+)
Current Liabilities
Increase (+) Decrease (-)
Investing
Guidelines
Statement of Financial Position
Non-current Assets
(take note of Accumulated Depreciation)
Increase (-)
Decrease (+)
 Guidelines
Statement of Financial Position
Financing
Noncurrent Liabilities
Increase (+) Decrease (-)
Statement of Changes in Equity
(take note of Retained Earnings & Treasury Shares)
Increase (+) Decrease (-)
Retained Earnings (take note of dividends, net
income not included)
Treasury Shares
Increase (-) Decrease (+)
Statement of Cash Flows
Forever Company showed the following financial
statements for 2015:

Sales 3,850,000
Less: Cost of goods sold 2,270,000
Gross profit 1,580,000
Less: Operating expenses
Salaries 580,000
Depreciation 240,000
Other expenses 290,000
Doubtful accounts (writeoff P10,000) 30,000 1,140,000
Net profit 440,000
Statement of Cash Flows

Assets 2015 2014

Cash and cash equivalents 170,000 130,000
Accounts receivable 450,000 410,000
Allowance for doubtful accounts (50,000) (30,000)
Inventory 840,000 910,000
Prepaid expenses 50,000 40,000
Property, plant and equipment 2,550,000 2,200,000
Accumulated depreciation (700,000) (600,000)
Goodwill 360,000 360,000
3,670,000 3,420,000
Statement of Cash Flows

Liabilities and Equity 2015 2014

Accounts payable 300,000 240,000
Salaries payable 70,000 100,000
Notes payable – bank 0 250,000
Share capital 2,150,000 1,950,000
Retained earnings 1,150,000 880,000
3,670,000 3,420,000
Statement of Cash Flows

Additional information:
1. A cash dividend of P170,000 was declared and paid during
the year.
2. Equipment of P200,000 with accumulated depreciation of
P140,000 was sold for cash at no gain or loss.
3. The net change in the equipment after considering the
equipment sold was the result of a cash acquisition.
4. The note payable-bank matured this year and was
accordingly paid in cash.
5. The share capital was issued for cash.
Statement of Cash Flows
Statement of Cash Flows
Reminders: Cash Flows

IFRS US GAAP
Interest received Operating or investing Operating
Interest paid Operating or investing Operating
Dividends
Operating or investing Operating
received
Dividends paid Operating or financing Financing
Not considered part of
Considered part of cash and cash
Bank overdrafts
cash equivalents equivalents and
classified as financing
Reminders: Cash Flows

IFRS US GAAP
Generally operating, but a
portion can be allocated to
Taxes paid investing or financing if it can Operating
be specifically identified with
these categories
SW 1: Cash Flows

Stone Company provided the following information at year end:

2015 2014
Accounts receivable 620,000 680,000
Inventory 1,960,000 1,840,000
Accounts payable 380,000 520,000
Accrued expenses 500,000 340,000
SW 1: Cash Flows

The income statement for the year ended December 31, 2015
showed the following data:

Net income 2,120,000

Depreciation 240,000
Amortization of patent 80,000
Gain on sale of land 200,000

Required:
Determine the cash flow from operating activities for 2015.
SW 1: Cash Flows
SW 2: Cash Flows

Hill Company provided the following comparative statement of

financial position:

2015 2014
Cash and cash equivalents 750,000 950,000
Accounts receivable 1,750,000 1,100,000
Inventory 2,550,000 1,800,000
Prepaid expenses 100,000 150,000
Property, plant and equipment 5,300,000 4,300,000
Accumulated depreciation (1,150,000) (800,000)
SW 2: Cash Flows

Hill Company provided the following comparative statement of

financial position:

2015 2014
Accounts payable 1,250,000 1,000,000
Accrued expenses 50,000 200,000
Share capital 4,750,000 4,250,000
Retained earnings 3,250,000 2,050,000
SW 2: Cash Flows

Additional information
a. The statement of retained earnings for 2015 showed net income
of P1,500,000 and cash dividend paid of P300,000.
b. During the year, the entity purchased equipment for cash and
issued share capital for cash.

Required:
Prepare the statement of cash flows for 2015 using the indirect
method.
SW 2: Cash Flows
SW 2: Cash Flows
SW 3: Cash Flows
Mountain Company reported the following income statement for
the year ended December 31, 2015:
Sales 4,500,000
Cost of sales
Inventory – January 1 750,000
Purchases 2,850,000
Goods available for sale 3,600,000
Inventory – December 31 (600,000) (3,000,000)
Gross income 1,500,000
Expenses
Salaries 600,000
Rent 250,000
Insurance 20,000
Doubtful accounts 30,000
Other expenses 100,000
Depreciation 50,000 (1,050,000)
Net income 450,000
SW 3: Cash Flows
Additional information:

December 31 January 1
Accounts receivable 540,000 440,000
Allowance for doubtful accounts 40,000 20,000
Inventory 600,000 750,000
Prepaid insurance 15,000 10,000
Accounts payable 280,000 160,000
Accrued salaries payable 50,000 80,000
Equipment 1,200,000 1,200,000
Accumulated depreciation 290,000 240,000
SW 3: Cash Flows

During the year, the entity recognized doubtful accounts expense of

P30,000 and wrote off uncollectible accounts of P10,000.

Required:
Determine the cash flow from operating activities using the:
a. Indirect method
b. Direct method
SW 3: Cash Flows
SW 3: Cash Flows
SW 4: Cash Flows

The following profit or loss information is available for Catherine

Company for the year ended December 31, 2015:

Sales P 2,400,000
Cost of goods sold 1,800,000
Selling expenses 280,000
Administrative expenses 60,000
Interest expense 20,000
Gain on sale of equipment 10,000
Income tax expense 75,000
SW 4: Cash Flows

The current assets and liabilities at the end of 2015 and 2014 are as
follows:

12/31/2015 12/31/2014
Cash P369,000 P 230,000
Accounts receivable 180,000 140,000
Inventories 380,000 350,000
Accounts payable 290,000 230,000
SW 4: Cash Flows

Additional information:
1. Depreciation of P110,000 is included. P80,000 in selling expenses
and P30,000 in administrative expenses.
2. During the year, equipment was sold for P100,000 cash. This
equipment cost P150,000 and had a carrying value of P90,000.
3. New equipment was purchased for P70,000 cash.
4. P120,000 dividends were declared and paid.
5. The company purchased 300 treasury shares for cash of P36,000.

Prepare the Statement of Cash Flows using the:

1. Indirect method
2. Direct method
SW 4: Cash Flows
SW 4: Cash Flows
SW 4: Cash Flows
SW 5: Cash Flows

Forest Company provided the following information for the

preparation of a statement of cash flows for the current year:

2015 2014
Cash and cash equivalents 593,000 300,000
Trading securities 300,000 200,000
Accounts receivable, net of allowance 600,000 520,000
Inventory 900,000 840,000
Property, plant and equipment 2,000,000 2,100,000
Goodwill 200,000 200,000
Total assets 4,593,000 4,160,000
SW 5: Cash Flows

2015 2014
Accounts payable 490,000 800,000
Accrued expenses 310,000 210,000
Bonds payable 800,000 1,000,000
Preference share capital, P100 500,000
par, each share convertible 400,000
into two ordinary shares
Ordinary share capital, P20 par 820,000 700,000
Share premium 500,000 400,000
Retained earnings 1,273,000 550,000
Total Liabilities and Equity 4,593,000 4,160,000
SW 5: Cash Flows

Additional information:
1. Net income for the current year was P1,733,000.
2. Cash dividends paid during the year totaled P1,000,000.
3. The bonds mature on January 1, 2020. On December 31, 2015,
bonds with face of P200,000 were retired at 105.
4. The entity sold 4,000 ordinary shares at P30 per share.
5. The decrease in preference share capital resulted from the
exercise of the conversion privilege by preference shareholders.

Required:
Prepare the statement of cash flows for the current year.
SW 5: Cash Flows
SW 5: Cash Flows