LESSON # 3

Statement of cash flows

Problem 1
On December 31, 2019, Kale Company had the following balances in the bank accounts with First Bank:
Checking account #101 1,750,000
Checking account #201 ( 100,000)
Time deposit 250,000
Commercial papers 1,000,000
90-day treasury bill, due February 28, 2020 500,000
180-day treasury bill, due March 15, 2020 800,000
On December 31, 2019, what amount should be reported as cash and cash equivalent

a. 3,400,000

b. 2,000,000
c. 2,400,000
d. 3,200,000

Problem 2
Oakwood Company provided the following data for the current year:

Cash balance, beginning of year 1,300,000

Cash flow from financing activities 1,000,000
Total shareholders’ equity, end of year 2,300,000
Cash flow from operating activities 400,000
Cash flow from investing activities (1,500,000) Total
shareholders’ equity, beginning of year 2,000,000

What is the cash balance at the end of current year?

a. 1,200,000
b. 1,600,000
c. 1,400,000
d. 1,700,000

Problem 3
Seawall Company provided the following data for the preparation of the statement of cash flows for the current
year:
Dividends declared and paid 800,000

Cash flow from investing activities (2,500,000)

Cash flow from financing activities ( 800,000)

December 31 January 1

Cash 2,100,000 1,200,000

Other assets 21,000,000 22,700,000
Liabilities 10,500,000 11,700,000
Share capital 2,000,000 2,000,000
Retained earnings 10,600,000 10,200,000
What amount should be reported as cash flow from operating activities?
a. 4,200,000
b. 2,400,000
c. 4,500,000
d. 5,400,000

Problem 4
Santana Company provided the following information for the current year:
December 31 January 1

Cash 1,500,000 1,000,000

Retained earnings 7,000,000 5,400,000
Cash flow from operating activities ?

Cash flow from investing activities (4,800,000)

Cash flow from financing activities 1,800,000

Dividends declared and paid 2,000,000

Net income 3,600,000

What amount should be reported as cash flow from operating activities?

a. 3,500,000
b. 2,500,000
c. 4,500,000
d. 3,600,000

Problem 5
Moon Company reported net income of P5,000,000 for the current year. Depreciation expense was P1,900,000.

The following working capital accounts changed:

Accounts receivable 1,100,000 increase

Nontrading equity investment 1,600,000 increase
Inventory 730,000 increase
Nontrade note payable 1,500,000 increase
Accounts payable 1,220,000 increase

Under the indirect method, what net amount of adjustments is required to reconcile net income to net cash
provided by operating activities?

a. 4,950,000
b. 1,050,000
c. 1,290,000
d. 310,000

Problem 6
Kresley Company reported net income of P750,000 for the current year:

The entity provided the following account balances for the preparation of statement of cash flows for the current
year:
January 1 December 31

Accounts receivable 115,000 145,000

Allowance for uncollectible accounts 4,000 5,000

Prepaid rent expense 62,000 41,000

Accounts payable 97,000 112,000

What is the net cash provided by operating activities for the current year?
a. 727,000
b. 743,000
c. 755,000
d. 757,000

Problem 7
Kentucky Company reported net income of P1,500,000 for the current year:

The entity provided the following changes in several accounts during the current year.
Investment in Videogold Company share carried

On the equity basis 55,000 increase

Accumulated depreciation, caused by major
Repair to project equipment 21,000 decrease
Premium on bonds payable 14,000 decrease
Deferred tax liability 18,000 increase
In the statement of cash flows, what is the net cash provided by operating activities?

a. 1,504,000

b. 1,483,000
c. 1,449,000
d. 1,428,000

Problem 8
Albay Company provided the following information:
Accounts receivable, January 1, net of allowance

Of P100,000 1,200,000
Accounts receivable, December 31, net of allowance
Of P300,000 1,600,000
Sales for the current year – all on credit 8,000,000
Uncollectible accounts written off during the year 70,000
Recovery of accounts written off 20,000
Bad debt expense for the year 250,000
Cash expenses for the year 5,250,000
Net income for the year 2,500,000

What is the net cash flow from operating activities?

a. 2,100,000
b. 2,350,000
c. 2,080,000
d. 2,150,000

Problem 9

Balcktown Company reported the following account balances:

December 31 January 1

Accounts payable 500,000 650,000

Inventory 300,000 250,000
Accounts receivable 800,000 900,000
Prepaid expenses 400,000 600,000
• All purchases of inventory were on account.

• Depreciation expense of P900,000 was recognized.

• Equipment was sold during the year and a gain of P300,000 was recognized
The entity provided the following cash flow information:
Cash collected from customers 9,500,000
Cash paid for inventory (4,100,000)
Cash paid for other expenses (1,400,000)
Cash flow from operations 4,000,000

What is the net income for the current year?

a. 3,300,000
b. 3,400,000
c. 3,000,000
d. 3,900,000

Problem 10

Rumulus Company reported the following information in the financial statements for the current year:
Capital expenditures 1,000,000
Finance lease payments 125,000
Income taxes paid 325,000
Dividends paid 200,000
Net interest payments 220,000
What total amount should be reported as supplemental disclosures in the statement of cash flows prepared using
the indirect method?

a. 1,125,000
b. 1,870,000
c. 545,000
d. 745,000

Problem 11

Stone Company provided the following information at year-end:

2019 2018

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

The income statement for the current year showed:

Net income 2,120,000

Depreciation 240,000

Amortization of patent 80,000

Gain on sale of land 200,000

What amount should be reported as net cash provided by operating activities?

a. 2,200,000
b. 2,400,000
c. 2,440,000
d. 2,600,000

Problem 12
Brown Company reported the following information for the current year:

Sales 2,800,000
Cost of goods sold 1,000,000
Distribution costs 400,000
Administrative expenses 350,000
Depreciation 250,000
Interest expense 80,000
Income tax expense 280,000

All sales were made for cash and all expenses other than depreciation and bond premium amortization of
P20,000 were paid in cash. All current assets and current liabilities remained unchanged.

What is the net cash provided by operating activities for the current year?

a. 440,000
b. 690,000
c. 670,000
d. 710,000

Problem 13

Matthew Company provided the following information for the current year:
Purchase of inventory 1,950,000
Purchase of land, with the vendor financing P1,000,000
For 2 years 3,500,000
Purchase of plant for cash Sale of plant: 2,500,000

Carrying amount 500,000

Cash proceeds 400,000
Buyback of ordinary shares 700,000

What amount of investing net cash outflows should be reported in the statement of cash flows for the current
year?

a. 5,600,000
b. 4,600,000
c. 6,550,000
d. 5,300,000

Problem 14
Nellie Company provided the following information at the end of each year:

2019 2018
Borrowings 2,500,000 800,000
Share capital 3,500,000 2,000,000
Retained earnings 950,000 750,000
Borrowings of P300,000 were repaid during 2019 and new borrowings include P200,000 vendor financing
arising on the acquisition of a property.
The movement in retained earnings comprised profit for 2019 of P900,000, net of dividends of P700,000. The
movement in share capital arose from issuance of share capital for cash during the year.

What amount should be reported as financing net cash inflows for the current year? a. 2,400,000

b. 2,200,000
c. 2,500,000
d. 2,300,000

Problem 15

Riverside Company provided the following data for the current year:

• Purchased a building for P1,200,000.

Paid P400,000 and signed a mortgage with the seller for the remaining P800,000.

• Executed a debt-equity swap and replaced a P600,000 load by giving the lender ordinary shares worth
P600,000 on the date the swap was executed.

• Purchased land for P1,000,000. Paid P350,000 and issued ordinary share worth P650,000.

• Borrowed P550,000 under a long-term loan agreement.

Used the cash from the loan proceeds to purchase additional inventory P150,000, to pay cash dividend
P300,000 and to increase the cash balance P100,000.

1. What amount should be reported as net cash used in investing activities?

a. 1,200,000
b. 2,200,000
c. 400,000
d. 750,000

2. What amount should be reported as net cash provided by financing activities?

a. 350,000
b. 850,000
c. 250,000
d. 550,000