2. Statement Of Cash Flows

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STATEMENT OF CASH FLOWS A COMPANY provided the following information: Cash Financial asset held for trading Accounts receivable Allowance for doubtful accounts Inventories Investment in associate Property, plant and equipment Accumulated depreciation Patent, Net

2017 6,600,000 2,500,000 4,800,000 (800,000) 5,200,000 5,400,000 13,000,000 (3,700,000) 1,000,000

2016 5,500,000 3,200,000 (200,000) 7,000,000 5,000,000 9,000,000 (3,200,000) 1,700,000

Accounts payable Note payable – bank Deferred tax liability Bonds payable Share capital, P10 par value Share premium Treasury shares at cost Retained earnings

4,800,000 2,000,000 700,000 3,000,000 18,000,000 1,500,000 (500,000) 4,500,000

4,500,000 3,500,000 500,000 15,000,000 1,000,000 3,500,000

 

   

The net income for the current year is P6,000,000. The entity paid a cash dividend of P5,000,000 on October 1, 2017. During the current year, the entity purchased financial asset held for trading for P3,000,000 cash and sold financial asset held for trading costing P1,000,000 for P1,400,000 cash. On December 31, 2017, the market value of the remaining financial asset increased by P500,000. On January 1, 2017, the entity sold equipment costing P1,000,000, with a carrying amount of P600,000, for P500,000 On July 1, 2017, the entity purchased equipment for P2,000,000 cash. On December 31, 2017, the entity purchased land by issuing bonds payable at face value of P3,000,000. On December 31, 2016, the entity acquired 20% of another entity’s share capital for P5,000,000. The associate reported income of P3,000,000 for 2017 and paid cash dividend of P1,000,000 on December 31, 2017.

1. What is the net cash provided by operating activities? a. 6,500,000 b. 6,100,000 c. 9,000,000 d. 8,600,000 2. What is the net cash used in investing activities? a. 1,900,000 b. 1,500,000 c. 3,500,000 d. 4,000,000 3. What is the net cash used in financing activities? a. 3,500,000 b. 3,100,000 c. 1,000,000 d. 4,000,000 1

BALIUAG UNIVERSITY CPA REVIEW FINANCIAL ACCOUNTING PROBLEMS

FAR-2017-02

4. B COMPANY reported net income of P7,500,000 for the current year. Investment in shares of stock carried on the equity basis Accumulated depreciation, caused by major repair to equipment Premium on bonds payable Deferred tax liability

550,000 increase 210,000 decrease 140,000 decrease 180,000 increase

What is the net cash provided by operating activities? a. 7,540,000 b. 7,270,000 c. 6,990,000 d. 6,780,000 5. C COMPANY reported net income of P7,500,000 for the current year. The following account balances are provided for the preparation of the statement of cash flows: January 1 1,150,000 40,000 620,000 970,000

Accounts receivable Allowance for doubtful accounts Prepaid rent expense Accounts payable

December 31 1,450,000 50,000 410,000 1,120,000

What is the net cash provided by operating activities? a. 7,270,000 b. 7,430,000 c. 7,550,000 d. 7,570,000 6. D COMPANY reported net income of P3,000,000 for the current year. Changes occurred in certain accounts as follows: Equipment Accumulated depreciation Note payable

250,000 increase 400,000 increase 300,000 increase

During the year, the entity sold equipment costing P250,000 with accumulated depreciation of P150,000 for a gain of P50,000. In December of the current year, the entity purchased equipment costing P500,000 with P200,000 cash and 12% note payable of P300,000. What amount should be reported as net cash provided by operating activities? a. 3,400,000 b. 3,500,000 c. 3,550,000 d. 3,600,000 7. E COMPANY provided the following information for the current year: Dividend received Dividend paid Cash received from customers Cash paid to suppliers and employees Interest received Interest paid on long-term debt Proceeds from issuing share capital Proceeds from sale of long-term investments Income taxes paid

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500,000 1,000,000 9,000,000 6,000,000 200,000 400,000 1,500,000 2,000,000 300,000

BALIUAG UNIVERSITY CPA REVIEW FINANCIAL ACCOUNTING PROBLEMS

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What is the net cash provided by operating activities? a. 3,300,000 b. 3,000,000 c. 2,700,000 d. 2,000,000 8. F COMPANY reported the following information in the year-end financial statements: Capital expenditures Capital lease payments Income taxes paid Dividends paid Net interest payment

1,000,000 125,000 325,000 200,000 220,000

What total amount should be reported as supplemental disclosures in the statement of cash flows prepared using the indirect method? a. 545,000 b. 745,000 c. 1,125,000 d. 1,870,000 9. During 2017, G COMPANY had the following activities related to financial operations: Payment for the early retirement of long-term bonds payable (carrying amount of bonds payable, P5,000,000) Payment in 2017 of cash dividend declared in 2016 Preference share capital converted into ordinary share capital Proceeds from sale of treasury shares (cost of treasury shares P1,000,000)

4,000,000 2,000,000 1,000,000 1,500,000

What amount should be reported as net cash used in financing activities? a. 4,500,000 b. 3,500,000 c. 2,500,000 d. 5,500,000 10. H COMPANY provided the following data for the current year: Purchase of real estate for cash (cash was borrowed from bank) Sale of investment securities for cash Purchase of patent for cash Dividends paid Issuance of ordinary shares for cash Payment of bank loan Issuance of bonds payable for cash Increase in customers’ deposit What is the net cash used in investing activities? a. 6,750,000 b. 3,750,000 c. 1,750,000 d. 500,000 11. I COMPANY had the following activities during the current year:  

Acquired share capital of another entity for P2,000,000 Sold an investment with carrying amount of P2,000,000 for P1,500,000 3

5,500,000 5,000,000 1,250,000 6,000,000 2,500,000 1,500,000 3,000,000 200,000

BALIUAG UNIVERSITY CPA REVIEW FINANCIAL ACCOUNTING PROBLEMS  

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Acquired a P5,000,000 one-year certificate of deposit from a bank. During the year, interest of P5,000,000 was received from the bank Collected dividends of P300,000 on share investments

What amount should be reported as net cash used in investing activities? a. 5,500,000 b. 5,000,000 c. 4,700,000 d. 6,300,000 12. J COMPANY provided the following data for the current year: Gain on sale of equipment Proceeds from sale of equipment Purchase of bonds with face value of P2,000,000 Amortization of bond discount Dividends declared Dividends paid Proceeds from sale of treasury shares (carrying amount of treasury P650,000)

60,000 100,000 1,800,000 20,000 450,000 380,000 750,000

What amount should be reported as net cash used in investing activities? a. 1,700,000 b. 1,760,000 c. 1,880,000 d. 1,940,000 K COMPANY used the direct method to prepare the statement of cash flows. Cash Accounts receivable Inventory Property, plant and equipment Unamortized bond discount Cost of goods sold Selling expenses General and administrative expenses Interest expense Income tax expense Allowance for doubtful account Accumulated depreciation Trade accounts payable Income taxes payable Deferred income taxes 8% callable bonds payable Share capital Share premium Retained earnings Sales

2017 35,000 33,000 31,000 100,000 4,500 250,000 141,500 137,000 4,300 20,400 756,700

2016 32,000 30,000 47,000 95,000 5,000 380,000 172,000 151,300 2,600 61,200 976,100

1,300 16,500 25,000 21,000 5,300 45,000 50,000 9,100 44,700 538,800 746,700

1,100 15,000 17,500 27,100 4,600 20,000 40,000 7,500 64,600 778,700 976,100

The entity purchased P5,000 in equipment during 2017. The entity allocated one-third of the depreciation expense to selling expenses and the remainder to general and

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BALIUAG UNIVERSITY CPA REVIEW FINANCIAL ACCOUNTING PROBLEMS

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administrative expenses. There was no writeoff of accounts receivable during 2017. What amount should be reported in the statement of cash flows for the following: 13. Cash collected from customers a. 541,800 b. 541,600 c. 536,000 d. 535,800 14. Cash paid for goods to be sold? a. 258,500 b. 257,500 c. 242,500 d. 226,500 15. Cash paid for interest? a. 4,800 b. 4,300 c. 3,800 d. 1,700 16. Cash paid for income taxes? a. 25,800 b. 20,400 c. 19,700 d. 15,000 17. Cash paid for selling expenses a. 142,000 b. 141,500 c. 141,000 d. 140,000 L COMPANY provided the following data: 2017 350,000 840,000 660,000 50,000 80,000 1,130,000 110,000 530,000 140,000 70,000 500,000 1,200,000 560,000 6,400,000 5,000,000 1,000,000 400,000

Cash Accounts receivable, net Merchandise inventory Prepaid expenses Long term investment Property, plant and equipment Accumulated depreciation Accounts payable Accrued expenses Dividend payable Note payable – long term debt Share capital Retained earnings Net credit sales Cost of goods sold Expenses Net income

2016 150,000 580,000 420,000 100,000 600,000 50,000 440,000 130,000 900,000 330,000 4,000,000 3,200,000 520,000 280,000

All accounts receivable and accounts payable related to trade merchandise. Accounts payable are recorded net and always paid to take all of the discounts allowed. The

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BALIUAG UNIVERSITY CPA REVIEW FINANCIAL ACCOUNTING PROBLEMS

FAR-2017-02

allowance for doubtful accounts at the end of 2017 was the same as at the end of 2016. No receivable were charged against the allowance during 2017. The proceeds from the note payable were used to finance a new store building. Share capital was sold to provide additional working capital. 18. What is the net cash provided by operating activities for the current year? a. 400,000 b. 100,000 c. 200,000 d. 110,000 19. What is the net cash used in investing activities for the current year? a. 80,000 b. 530,000 c. 610,000 d. 660,000 20. What is the net cash provided by financing activities for the current year? a. 140,000 b. 300,000 c. 500,000 d. 700,000

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