MABALACAT CITY COLLEGE ACCOUNTING REVIEW 1

INSTITUTE OF BUSINESS AND EDUCATION Statement of Cash Flows – Part 1

Problem 1: Fragile Company used the direct method to prepare the statement of cash flows. The entity had the
following cash flows during the current year:
Receipts Disbursements
From issuance of Ordinary Shares 4,000,000 For wages and other operating expenses 1,200,000
From customers 2,000,000 For Insurance 100,000
From Dividends on Long-term investments 300,000 For dividends 200,000
From repayment of loan made to another 2,200,000 For Taxes 400,000
entity
From sale of trading securities 300,000 For purchase of land 800,000
** Cash balance at the beginning of the year is P 3,500,000.
1. What is the net cash provided(used) by operating activities? [900,000]
2. What is the net cash provided(used) by investing activities? [1,400,000]
3. What is the net cash provided(used) by financing activities?[3,800,000]
4. What is the cash balance at year-end? [9,600,000]

Problem 2:Capiz Company provided the following for the current year:
Increase in long term-debt P 5,000,000
Purchase of treasury shares 1,000,000
Depreciation and Amortization 1,500,000
Gain on sale of equipment 500,000
Proceeds from issuance of share capital 4,000,000
Purchase of equipment for cash 7,000,000
Proceeds from sale of equipment 2,000,000
Payment of cash dividend 2,500,000
Net income 8,000,000
Increase (Decrease) in working capital
Accounts receivable 2,000,000
Inventory (3,500,000)
Trade Accounts and notes Payables 4,000,000
Income tax payable (4,500,000)
Cash balance, Jan 1 6,000,000

1. What is the net cash provided (used) in Operating activities? [10,000,000]

2. What is the net cash provided (used) in Investing activities? [(5,000,000)]
3. What is the net cash provided (used) in Financing activities? [5,500,000]
4. What is the cash balance on Dec 31? [16,500,000]

Problem 3: Mountain Company Provided the following comparative statement:

 Cash needed to purchase a new equipment and improve the working capital position was raised by borrowing
from a bank with a long-term note.
 Equipment costing P 2,000,000 and carrying amount of P 1,500,000 was sold for P 1,800,000.
 The entity paid cash dividend of P 3,0000,000 in the current year. No entries in retained earnings account
other than to record dividend and net income for the year.
1
Page

Identify: Cash provided (used) in: (1) Operating activities, (2) Investing Activities and; (3) Financing Activities
(1) 7,400,000 (2) (13,200,000) (3) 4,000,000

COMPILED BY: WENSTON DEL ROSARIO ACCTGREV1_009.1