INDIRECT METHOD

The ABC company uses indirect method for preparing its statement of cash flows. It reported a net
income of P100,000 for the year 2019.

During the year 2019, the working capital accounts were changed as follows:

Increase in accounts receivable: P22,000

Increase in accounts payable: P18,600
Increase in inventory: P14,800
Decrease in non-trade notes payable: P30,000
Increase in available for sale securities: P32,000

The depreciation expense was P34,000 for the year 2019.

Required: Compute net cash provided (used) by operating activities using indirect method.

DIRECT METHOD
The following information is available from the books of ABC Ltd. for the year ended 31st March, 2019:

(a) Cash sales for the year were P1000,000 and sales on account P1,200,000.

(b) Payments on accounts payable for inventory totaled P780,000.

(c) Collection against accounts receivable were P760,000.

(d) Rent paid in cash P220,000, outstanding rent being P20,000.

(e) 400,000 Equity shares of P10 par value were issued for P4,800,000.

(f) Equipment was purchased for cash P1,680,000.

(g) Dividend amounting to P1,000,000 was declared, but yet to be paid.

(h) P400,000 of dividends declared in the previous year were paid.

(i) An equipment having a book value of P160,000 was sold for P240,000.

(j) The cash account was increased by P3,720,000.

Prepare a cash flow statement using direct method.