Rubiya org - This answer key to ulo 7 PDF

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Preciosa T. RubiCourse code: Acc 221 (7746)Let’s CheckNow that you know the essential knowledge on the preparation of statement of cash flows, let us check your understanding of the topic.Activity 1. In column A, indicate whether the item is presented in the operating activities (OA), investing acti...

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Preciosa T. Rubi Course code: Acc 221 (7746)

Let’s Check Now that you know the essential knowledge on the preparation of statement of cash flows, let us check your understanding of the topic. Activity 1. In column A, indicate whether the item is presented in the operating activities (OA), investing activities (IA), and financing activities section in the statement of cash flows. In column B, indicate whether the item is an Inflow (I) or an outflow (O). A B 1.) Dividend Received 2.) Cash received from customers 3.) Proceeds from sale of long term investments 4.) Interest paid on long term debt 5.) Dividend Paid 6.) Income taxes paid 7.) Proceeds from issuing share capital 8.) Cash paid to suppliers and employees 9.) Cash paid to repay loan 10.) Cash payment to purchase land

___OA____ ___OA____ ____IA____ ___OA____ ___FA____ ___OA____ ___FA____ ___OA____ ___FA____ ___IA_____

____I_____ ____I_____ ____I_____ ____O____ ____O____ ____O____ ____I_____ ____O____ ____O____ ____O____

Let’s Analyze Now that you get acquainted with the preparation of statement of cash flows you may now apply the essential knowledge you’ve learned in answering the questions below. Encircle the letter of your answer. 1.) In preparing its statement of cash flows for the year ended December 31, 20A, Razel company collected the following data: Proceeds from sale of treasury shares (carrying amount, 390,000) 450,000 Dividend paid 228,000 Dividend declared 270,000 Purchase of AS bonds (par value 1,000,000) 1,080,000 Proceeds from sale of equipment 60,000 Dividends Received 108,,000 What amount should be reported as net cash provided by financing activities? Proceeds from sale of treasury shares (carrying amount, 390,000) Dividend paid Cash provided by financing activities

450,000 (228,000) 222,000

2.) The following information has been compiled from the accounting records of Misha company for the year ended December 31, 20A: Purchase of inventory 1,170,000 Purchase of Land, with the vendor financing P600,000 for 2 years 2,100,000 Purchase of plant for cash Sale of plant: Book value Cash Proceeds Buyback of ordinary shares

1,500,000 300,000 240,000 420,000

What is the amount of investing net cash outflows that would be reported in the 20A statement of cash flows? Purchase of Land

2,100,000-600,000

Purchase of plant for cash Sale of plant - Cash Proceeds Net cash outflow from investing activities

(1,500,000) (1,500,000) 240,000 2,760,000

3.) The following selected information is provided by Almiro Company. All sales are credit sales and all receivables are trade receivables. Accounts Receivable, Jan. 1, net of allowance of P240,000 2,880,000 Accounts Receivable, Dec. 31, net of allowance of P720,000 3,840,000 Sales for the year 19,200,000 Uncollectible accounts written off during the year 168,000 Recovery of accounts written off 48,000 Bad debt expense for the year 600,000 Cash expenses for the year 12,600,000 Net income for the year 6,000,000 Net income for the year Increase in Accounts receivable Net cash flow from operating activities

6,000,000 (960,000) 5,040,000

In a Nutshell Activity 1. In this activity your task is to prepare a statement of cash flow for Dianne company for the year ended 20B. In preparing the statement of cash flow as a whole, use the indirect method for operating activities section. But you are also required to present the direct method of presenting operating activities section and differentiate the two methods. After preparing the cash flow, you explain the purpose of presenting the cash flow by sighting the importance of it on the different users of financial statements. You are also required to answer the questions asked below.

Dianne company provided the following data: Cash Accounts Receivable, net Merchandise Inventory Prepaid Expenses Long-term investment Property, plant and equipment Accumulated depreciation Accounts Payable Accrued expenses Dividends Payable Note Payable- long term debt Share capital Retained Earnings Net credit sales Cost of goods sold Expenses Net Income

201B 600,000 1,680,000 1,320,000 200,000 160,000 2,260,000 220,000 1,060,000 280,000 140,000 1,000,000 2,400,000 1,120,000 12,800,000 10,000,000 2,000,000 800,000

20A 400,000 1,160,000 840,000 100,000 1,200,000 100,000 880,000 260,000

1,800,000 660,000 8,000,000 6,400,000 1,040,000 560,000

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable are recorded net and always paid to take all of the discounts allowed. The allowance for doubtful accounts at the end of 2010 was the same as at the end of 2009. No receivables were charged against the allowance during 2010. The proceeds from the note payable were used to finance a new store building. Share capital was sold to provide additional working capital. a. What is the amount of cash collections from customers in 20B? Sales 12,800,000 Accounts Receivable, beg. 1,160,000 Accounts Receivable, end (1,680,000) Cash received from customers 12,280,000 1160 12800 12,280,000 1680 b. What is the amount of cash payments to merchandise creditors in 20B? Inventory, beg. 840,000 Add: Purchases 10,480,000 workback Cost of goods available for sale 11,320,000 Less: Inventory, end 1,320,000 Cost of goods sold 10,000,000 Purchases Accounts payable, beg

10,480,000 880,000

Accounts payable, end Cash paid to suppliers

(1,060,000) 10,300,000

c. What is the net cash provided by operating activities? Net income 800,000 Depreciation 120,000 Increase in accounts receivable (520,000) Increase in inventory (480,000) Increase in prepaid expenses (100,000) Increase in accounts payable 180,000 Increase in accrued expenses 20,000 Net cash flow from operating activities 20,000

Cash received from customers 12,280,000 Cash paid to supplier (10,300,000) Expenses 2,000,000-120,000-280,000+260,000+200,000-100,000 (1,960,000) OA 20,000 d. What is the net cash provided by financing activities during the current year? Issuance of shares 600,000 Dividends paid (340,000-140,000) (200,000) Issuance of notes payable-long term 1,000,000 Net cash flow from financing activities 1,400,000 Retained earnings, beg Add: Net income Total Less: dividends declared Retained Earnings, end

660,000 800,000 1,460,000 340,000 work back 1,120,000

e. What is the net cash used in investing activities during the current year? Purchase of long-term investment 160,000 Purchase of property, plant & equipment 1,060,000 Net cash flow from investing activities 1,220,000

DIANNE COMPANY STATEMENT OF CASH FLOW DATE CASH FLOW FROM OPERATING ACTIVITIES: Net income 800,000 Depreciation 120,000

Increase in accounts receivable Increase in inventory Increase in prepaid expenses Increase in accounts payable Increase in accrued expenses

(520,000) (480,000) (100,000) 180,000 20,000

20,000

CASH FLOW FROM INVESTING ACTIVITIES: Purchase of long-term investment ( 160,000) Purchase of property, plant & equipment (1,060,000)

(1,220,000)

CASH FLOW FROM FINANCING ACTIVITIES: Issuance of shares 600,000 Dividends paid (340,000-140,000) (200,000) Issuance of notes payable-long term 1,000,000 NET INCREASE IN CASH ADD: CASH BEG CASH END

1,400,000 200,000 400,000 600,000...