The following balance sheets are taken from the records of Golding Inc.

: 
Assets  20X1  20X2 
Cash  130,000  150,000 
Accounts Receivable  25,000  20,000 
Plant and Equipment  50,000  60,000 
Accumulated Depreciation  (20,000)  (25,000) 
Land  10,000  10,000 
Total Assets  195,000  215,000 
Liabilities and Equity     
Accounts Payable  10,000  5,000 
Bonds Payable  8,000  18,000 
Common Stock  120,000  120,000 
Retained Earnings  57,000  72,000 
Total Liabilities and Equity  195,000  215,000 
 
 
Additional information is as follows: Equipment costing $10,000 was purchased at year- end. No
equipment was sold. Net income for the year was $25,000, and $10,000 in dividends were
paid. 
 
Required: 
Prepare a statement of cash flows using the indirect method. 

Solution:
1. Cash flow change: 150,000- 130,000 = 20,000
2. Operating cash flows:
Net income Php 25,000
Add (deduct):
Decrease in accounts receivable 5,000
Depreciation expense 5,000
Decrease in accounts payable (5,000)
Net cash from operating activities Php 30,000

3. Cash from investing activities for purchase of equipment is (10,000)

4. Cash from financing activities:
Payment of dividends Php (10,000)
Issuance of Bonds 10,000
Net cash from financing activities Php 0
 Golding Inc.
Statement of Cash Flows
For the Year Ended December 31, 2016

Cash flows from operating activities:

Net income Php 25,000
Add (deduct):
Decrease in accounts receivable 5,000
Depreciation expense 5,000
Decrease in accounts payable (5,000)
Net cash from operating activities Php 30,000
Cash from investing activities:
Purchase of equipment (10,000)
Cash from financing activities:
Payment of dividends Php (10,000)
Issuance of Bonds 10,000
Net cash from financing activities 0
Net increase in cash Php 20,000