CASHFLOW

A. Indirect Method

KM Manufacturing Company
Statement of Cash Flows - Indirect Method
For the Year Ended, December 31, 2X20

Cash flows from operating activities

Net Income ₱ 430,000
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation Expense 880,000
Loss on disposal of plant assets 24,000
Increase in accounts receivable 165,000
Decrease in inventory 33,000
Increase in accounts payable 20,000 792,000
Net cash provided by operating activities 1,222,000

Cash flows from investing activities

Sale of equipment 270,000
Purchase of equipment 750,000
Net cash used by investing activities 480,000

Cash flows from financing activities

B. Payment of cash dividends 200,000 Direct
Net cash used by financing activities 200,000
Net increase in cash 542,000
Cash at beginning of period 130,000
Cash at end of period 672,000

Method
 KM Manufacturing Company
Statement of Cash Flows - Direct Method
For the Year Ended, December 31, 2X20

Cash flows from operating activities

Cash collections from customers 6,418,000
Less: Cash payments
To suppliers 2,757,000
For operating expenses 2,086,000
For income taxes 353,000 5,196,000
Net cash provided by operating activities 1,222,000

Cash flows from investing activities

Sale of equipment 270,000
Purchase of equipment 750,000
Net cash used by investing activities 480,000
Cash flows from financing activities
Payment of cash dividends 200,000
Net cash used by financing activities 200,000
Net increase in cash 542,000
Cash at beginning of period 130,000
Cash at end of period 672,000

Computation for Direct Method

*Computation of cash collection from customer
Sales revenue 6,583,000
Less: Increase in accounts receivable 165,000
Cash collection from customer 6,418,000

*Computation of cash payment to suppliers

Cost of good sold per income statement 2,810,000
Less: Decrease in inventories 33,000
Increase in accounts payable 20,000
Cash payment to suppliers 2,757,000