Solution manual managerial accounting concept and applications by cabrera chapter 06 answer
Bạn đang xem bản rút gọn của tài liệu. Xem và tải ngay bản đầy đủ của tài liệu tại đây (899.75 KB, 1,422 trang )
��#ࡱ#�################>###��
#################�###########�#######����####�###�###�###�###�###�###�����������
��������������������������������������������������������������������������������
��������������������������������������������������������������������������������
��������������������������������������������������������������������������������
��������������������������������������������������������������������������������
��������������������������������������������������������������������������������
���#q`
###�#�###############L�####bjbjqPqP##################
###4�###:###:##Pc######�#######################��##########��##########��#######
###########�#####�
######�
##�
######�
#######
#######
#######
##############(
#######(#######(#######(##8###H(##4###|)######(
######Z�##p###�1######�1##:###�1######�1######�1######[2######[2######[2######h�
######j�######j�######j�##5###��##D###�##D###'�##$###ʖ##h###2�##X###K�##�#######
#############
######�6######################W2######W2######�6######�6######K�##############�
######�
######�1##############�1##�####�######
######�1######h�##############
##############################################################�L######�1######�1
##
###`��r���##########(######�7##�###8L##$###########�N##�4##*�##0###Z�######\L##$
###��######�:##�
##��##H###�L####################################################################
##########��###############
######�L##T###[2######]3##�###
##d###################################[2######[2######[2######Z�######�6######�6
######�6######�6##############(
######(
######(
##��##�###D$##(
######(
######(
######�#######(
######(
######(
######�
######�
######�
######�
######�
######�
######����######
################################################################################
################################################################################
################################################################################
################################################################################
################################################################################
################################################################################
################################################################################
###################CHAPTER 6CASH FLOW ANALYSISI.
QuestionsPurposes of the
Statement of Cash Flowsa.
To predict future cash flowsb.
To evaluate
management decisionsc. To determine the ability to pay dividends to
shareholders and interest and principal to creditorsd.
To show the
relationship of net income to changes in the business�s cash.2. Comparative
balance sheets present the financial position of the enterprise at two points in
time. The income statement for the period between the two balance sheets
describes how the income-producing activities affected the financial position.
Because cash flows from operating activities may differ substantially from net
income, and because numerous other financing and investing activities have an
impact on financial position, the statement of cash flows is necessary. The
statement emphasizes changes in the cash balances that result from changes in
assets, liabilities and equity accounts caused by operating, investing and
financing activities.3. The most important source of cash for many successful
companies is from operating activities. A large positive operating cash flow is
a good sign because it means funds have been internally generated with no fixed
obligations or commitment to return such to anybody.4.
It is possible for
cash to decrease during a year when income is high because cash may be used not
only for operating activities but also for investing and financing activities.5.
Transactions involving accounts payable are not considered to be financing
activities because such transactions are used to obtain goods and services
rather than to obtain cash. Furthermore, purchases of goods and services relate
to a company�s day-to-day operating activities.6.
The loss is added back to
net income to avoid double counting since the entire proceeds from the sale (net
book value minus loss on sale) will appear as a cash inflow from investing
activities.7.
Three categories of transactions that may result in increases
in cash area.
Operating activitiesb. Investing activities (e.g., sale of
investments or other assets).c.
Financing activities (e.g., borrowing or
sale of shares). These activities are sources of cash when cash is increased as
a result of the particular activity.8.
Three categories of transactions that
may result in decreases in cash area.
Operating activitiesb. Investing
activities (e.g., purchase of investments or other assets).c.
Financing
activities (e.g., repayment of debt or retirement of shares).
These
activities are uses of cash when cash is decreased as a result of the particular
activity.9. Noncash transactions do not provide or consume cash even though they
may result in significant changes in financial position. Examples are the
issuance of share capital for plant assets and the conversion of debt or
preference shares into ordinary shares. Such transactions are not presented in
the body of the statement of cash flows but rather disclosed in a separate
schedule as financing or investing activities.10.
While net loss is usually
associated with a decrease in cash, it may be a source of cash if noncash
expenses are greater than the amount of the net loss. For example, if a net
loss of P100,000 included amortization and depreciation of P125,000 and no
noncash revenues existed, cash provided by operating activities would be
P25,000, computed as follows:Net loss
P(100,000)Add: Expenses not
requiring cash � depreciation
and amortization
125,000Net cash
provided by operating activities
P
25,00011.
The change in cash is the
difference between cash at the beginning and end of the accounting period. The
net amount of cash provided by or used in operating, investing and financing
activities must equal this change in cash. For example, if cash increased by
P150,000 during the year, total sources from operating, investing, and financing
activities must exceed total uses by P150,000. Also, if cash decreased by
P25,000 during the year, total uses of cash must exceed total sources by
P25,000.12. (a)
The use of cash does not occur until the cash dividend is
actually paid in the next period. The declaration of the dividend does affect
financial position, however, and should be disclosed as a noncash financing
activity in a separate schedule accompanying the statement of cash flows.
(b)
Because the dividend was declared and paid in the same accounting period,
it appears in the statement of cash flows as a cash decrease in the financing
activities category.13. Disagree. The refunding of 10% debt by the 8% debt
represents a significant financing activity, even though the net impact of the
exchange on the balance sheet or on the amount of cash is not material. The
issuance of 8% bonds and the retirement of 10% bonds should be reported as
noncash financing transactions in a schedule accompanying the statement of cash
flows.14.
The net income figure includes P150,000 as an expense. Only
P112,500 of this amount resulted in a decrease in cash, because P37,500
represents an increase in the deferred income tax liability account. In
determining cash provided by operating activities, the amount of income tax paid
is P112,500 (direct method). Alternatively, under the indirect method, P37,500
must be added to net income to determine cash flows from operating activities.
15.
The loss is omitted when listing expenses requiring cash payment (direct
approach) or added back to net income (indirect approach) in determining cash
provided by operating activities. This eliminates the impact of the transaction
from cash provided by operating activities. Then, the proceeds from the sale
are included as a source of cash in the investing activities category of the
statement of cash flows. Any tax effects of the transaction are included in the
tax expense figure and remain a part of cash flows from operating activities.16.
(1) Operating activities: Transactions that affect current assets, current
liabilities, or net income.
(2) Investing activities: Transactions that
involve the acquisition or disposition of noncurrent assets.
(3)
Financing
activities: Transactions (other than the payment of interest) involving
borrowing from creditors, and any transactions (involving the owners of a
company.17. Interest is included as an operating activity since it is part of
net income. Financing activities are narrowly defined to include only the
principal amount borrowed or repaid.18. Since the entire proceeds from a sale
of an asset (including any gain) appear as a cash inflow from investing
activities, the gain must be deducted from net income to avoid double counting.
19.
The direct method reconstructs the income statement on a cash basis by
restating revenues and expenses in terms of cash inflows and outflows. The
indirect method starts with net income and adjusts it to a cash basis to
determine the cash provided by operating activities.20.
An increase in the
Accounts Receivable account must be deducted from net income under the indirect
method because this is an increase in a noncash asset.21. A decrease in the
Accounts Payable account must be added to cost of goods sold under the direct
method. The cost of goods sold is increased by the amount of the decrease in
accounts payable. Because the cost of goods sold is increased, the net cash flow
provided by operating activities is decreased. The effect of a decrease in a
liability is a decrease in cash.22. A sale of equipment for cash would be
classified as an investing activity. Any transaction involving the acquisition
or disposition of noncurrent assets is classified as an investing activity.II.
ExercisesExercise 1 Net income
##P84,000##Adjustments to convert net
income to a cash basis:####Depreciation charges for the year
#P50,000###Increase in accounts receivable
#(60,000)###Increase in
inventory
#(77,000)###Decrease in prepaid expenses #2,000###Increase in
accounts payable #30,000###Decrease in accrued liabilities #(4,000)###Increase
in deferred income taxes
#���6,000#(53,000)##Net cash provided by operating
activities ##P31,000##Exercise 2Sales
#
P1,000,000###Adjustments to a
cash basis:####Less increase in accou#n#t#s# #r#e#c#e#i#v#a#b#l#e#
###
##
#
#6#0#,#0#0#0###P#9#4#0#,#0#0#0#############C#o#s#t# #o#f# #g#o#o#d#s#
#s#o#l#d#
###
#
#5#8#0#,#0#0#0#######A#d#j#u#s#t#m#e#n#t#s# #t#o# #a#
#c#a#s#h# #b#a#s#i#s#:#########P#l#u#s# #i#n#c#r#e#a#s#e# #i#n#
#i#n#v#e#n#t#o#r#y#
###
#+## #7#7#,#0#0#0#######L#e#s#s#
#i#n#c#r#e#a#s#e# #i#n# #a#c#c#o#u#n#t#s# #p#a#y#a#b#l#e# ###
## #
#3#0#,#0#0#0###6#2#7#,#0#0#0#############S#e#l#l#i#n#g# #a#n#d#
#a#d#m#i#n#i#s#t#r#a#t#i#v#e# #e#x#p#e#n#s#e#s# ###
#
#3#0#0#,#0#0#0#######A#d#j#u#s#t#m#e#n#t#s# #t#o# #a# #c#a#s#h#
#b#a#s#i#s#:#########L#e#s#s# #d#e#c#r#e#a#s#e# #i#n# #p#r#e#p#a#i#d#
#e#x#p#e#n#s#e#s# ###
## # #2#,#0#0#0#######P#l#u#s# #d#e#c#r#e#a#s#e# #i#n#
#a#c#c#r#u#e#d# #l#i#a#b#i#l#i#t#i#e#s# ###
#+## #4#,#0#0#0#######L#e#s#s#
#d#e#p#r#e#c#i#a#t#i#o#n# #c#h#a#r#g#e#s# ###
## #
#5#0#,#0#0#0###2#5#2#,#0#0#0#############I#n#c#o#m#e# #t#a#x#e#s#
###
#
#3#6#,#0#0#0#######A#d#j#u#s#t#m#e#n#t#s# #t#o# #a# #c#a#s#h#
#b#a#s#i#s#:#########L#e#s#s# #i#n#c#r#e#a#s#e# #i#n# #d#e#f#e#r#r#e#d#
#i#n#c#o#m#e# #t#a#x#e#s#
###
## #
#6#,#0#0#0###�#�#�#3#0#,#0#0#0#############N#e#t# #c#a#s#h#
#p#r#o#v#i#d#e#d# #b#y# #o#p#e#r#a#t#i#n#g# #a#c#t#i#v#i#t#i#e#s#
#####P##
3#1#,#0#0#0######N#o#t#e# #t#h#a#t# #t#h#e# #P#3#1#,#0#0#0# #a#g#r#e#e#s#
#w#i#t#h# #t#h#e# #c#a#s#h# #p#r#o#v#i#d#e#d# #b#y# #o#p#e#r#a#t#i#n#g#
#a#c#t#i#v#i#t#i#e#s# #f#i#g#u#r#e# #u#n#d#e#r# #t#h#e# #i#n#d#i#r#e#c#t#
#m#e#t#h#o#d# #i#n# #t#h#e# #p#r#e#v#i#o#u#s# #e#x#e#r#c#i#s#e#.##
#E#x#e#r#c#i#s#e# #3###I#t#e#m###A#m#o#unt#Add#Deduct##Accounts Receivable
#P70,000#decrease#X###Accrued Interest Receivable
#P6,000#increase##X##Inventory
#P110,000#increase##X##Prepaid
Expenses
#P3,000#decrease#X###Accounts Payable
#P40,000#decrease##X##Accrued Liabilities #P9,000#increase#X###Deferred
Income Taxes Liability #P15,000#increase#X###Sale of equipment
#P8,000#gain##X##Sale of long-term investments #P12,000#loss#X###Exercise
4Requirement (1) #Net income ##P75###Adjustments to convert net income to a
cash basis:#####Depreciation charges
#P40####Decrease in accounts
receivable #10####Increase in inventory #(30)####Decrease in prepaid expenses
#5####Increase in accounts payable #20####Decrease in accrued liabilities
#(10)####Increase in taxes payable #10####Increase in deferred taxes
#5####Loss on sale of long-term investments
#5####Gain on sale of land
#(40)#�15###Net cash provided by operating activities ##P90##Requirement
(2)
#Swan Company###Statement of Cash Flows###Operating activities:#####Net
cash provided by oper#a#t#i#n#g# #a#c#t#i#v#i#t#i#e#s# #(#s#e#e# #a#b#o#v#e#)#
#####P## 9#0#################I#n#v#e#s#t#i#n#g#
#a#c#t#i#v#i#t#i#e#s#:###########P#r#o#c#e#e#d#s# #f#r#o#m# #s#a#l#e# #o#f#
#l#o#n#g#-#t#e#r#m# #i#n#v#e#s#t#m#e#n#t#s#
###P##
4#5#########P#r#o#c#e#e#d#s# #f#r#o#m# #s#a#l#e# #o#f# #l#a#n#d#
###7#0#########A#d#d#i#t#i#o#n#s# #t#o# #l#o#n#g#-#t#e#r#m#
#i#n#v#e#s#t#m#e#n#t#s# ###(#2#0#)#########A#d#d#i#t#i#o#n#s# #t#o# #p#l#a#n#t#
#&# #e#q#u#i#p#m#e#n#t# ###(#1#5#0#)#########N#e#t# #c#a#s#h# #u#s#e#d# #for
investing activities
##(55)########Financing activities:#####Decrease in
bonds payable
#(20)####Increase in ordinary shares
#40####Cash dividends
#�(35)####Net cash used by financing activities ##�(15)########Net increase
in cash (net cash flow) ##20###Cash balance, beginning
##�100###Cash
balance, ending
##P120##While not a requirement, a worksheet may be helpful.
#Change##Source or Use?##Cash Flow Effect##Adjust-ments##Adjusted
Effect##Classification##Assets (except cash and cash equivalents)##Current
assets:#############Accounts receivable
#�10##Source##+10####+10##Operating##Inventory
#+30##Use##�30####�30##Operating##Prepaid expenses
#�5##Source##+5####+5##Operating##Noncurrent assets:#############Long-term
investments #�30##Source##+30##�50##�20##Investing##Plant and equipment
#+150##Use##�150####�150##Investing##Land
#�30##Source##+30##�30##0##Investing####Liabilities, Contra assets, and
Shareholders� Equity##Contra assets:#############Accumulated depreciation
#+40##Source##+40####+40##Operating##Current
liabilities:#############Accounts payable
#+20##Source##+20####+20##Operating##Accrued liabilities
#�10##Use##�10####�10##Operating##Taxes payable
#+10##Source##+10####+10##Operating##Noncurrent
liabilities:#############Bonds payable
#�20##Use##�20####�20##Financing##Deferred income taxes
#+5##Source##+5####+5##Operating##Shareholders�
equity:#############Ordinary shares
#+40##Source##+40####+40##Financing##Retained earnings:#############Net
income
#+75##Source##+75####+75##Operating##Dividends
#�35##Use##�35####�35##Financing####Additional entries##Proceeds from sale
of investments
#######+45##+45##Investing##Loss on sale of investments
#######+5##+5##Operating##Proceeds from sale of land
#######+70##+70##Investing##Gain on sale of land
#####�����######################################################################
################################################################################
################################################################################
############################ # 4#0###### #
4#0#####O#p#e#r#a#t#i#n#g#####T#o#t#a#l# ###########+#2#0###### # # 0######
+#2#0##########
#E#x#e#r#c#i#s#e# #5###S#a#l#e#s#
###P#6#0#0#######A#d#j#u#s#t#m#e#n#t#s# #t#o# #a# #c#a#s#h#
#b#a#s#i#s#:#########D#e#c#r#e#a#s#e# #i#n# #a#c#c#o#u#n#t#s#
#r#e#c#e#i#v#a#b#l#e#
###�#+#1#0###P#6#1#0#####C#o#s#t# #o#f# #g#o#o#d#s#
#s#o#l#d#
###2#5#0#######A#d#j#u#s#t#m#e#n#t#s# #t#o# #a# #c#a#s#h#
#b#a#s#i#s#:#########I#n#c#r#e#a#s#e# #i#n# #i#n#v#e#n#t#o#r#y#
###+#3#0#######I#n#c#r#e#a#s#e# #i#n# #accounts payable
#��20#260##Selling and administrative expenses #280###Adjustments to a
cash basis:####Decrease in prepaid expenses
#�5###Decrease in accrued
liabilities #+10###Depreciation charges
#��40#245##Income taxes
#30###Adjustments to a cash basis:####Increase in taxes payable
#�10###Increase in deferred taxes #���5#���15##Net cash provided by
operating activities
##P#############################################################################
##########################################################
9#0#####E#x#e#r#c#i#s#e# #6###R#e#q#u#i#r#e#m#e#n#t#s# #(#1#)# #a#n#d# #(#2#)##
###S#t#e#p#h#e#n#i#e# #C#o#m#p#a#n#y#######S#t#a#t#e#m#e#n#t# #o#f# #C#a#s#h#
#F#l#o#w#s#######F#o#r# #t#h#e# #Y#e#a#r# #E#n#d#e#d# #D#e#c#e#m#b#e#r# #3#1#,#
#2#0#0#8#############O#p#e#r#a#t#i#n#g# #a#c#t#i#v#i#t#i#e#s#:#########N#e#t#
#i#n#c#o#m#e#
#####P## 5#6#####A#d#j#u#s#t#m#e#n#t#s# #t#o# #c#o#n#v#e#r#t#
#n#e#t# #i#n#c#o#m#e# #t#o# #c#a#s#h#
#b#a#s#i#s#:#########D#e#p#r#e#c#i#a#t#i#o#n# #c#h#a#r#g#e#s#
###2#5#######I#ncrease in accounts receivable #(80)###Decrease in
inventory
#35###Increase in prepaid expenses #(2)###Increase in accounts
payable
#75###Decrease in accrued liabilities
#(10)###Gain on sale of
investments #(5)###Loss on sale of equipment
#2###Increase in deferred income
taxes #����8#��48##Net cash provided by operating activities
##�104######Investing activities:####Proceeds from sale of long-term
investments #12###Proceeds from sale of equipment
#18###Additions to plant
and equipment
#(110)###Net cash used for investing activities
##(80)######Financing activities:####Increase in bonds payable
#25###Decrease in ordinary shares #(40)###Cash dividends #�(16)###Net
cash used for financing activities ##�(31)######Net decrease in cash
##(7)##Cash balance, January 1, 2008
##���11##Cash balance, December
31, 2008
##P#############################################################################
################################################################################
############################################## # 4######W#h#i#l#e# #n#o#t# #a#
#r#e#q#u#i#r#e#m#e#n#t#,# #a# #w#o#r#k#s#h#e#e#t# #m#a#y# #b#e#
#h#e#l#p#f#u#l#.#####C#h#a#n#g#e#####S#o#u#r#c#e# #o#r# #U#s#e#?#####C#a#s#h#
#F#l#o#w# #E#f#f#e#c#t#####A#d#j#u#s#t#-#m#e#n#t#s#####A#d#j#u#s#t#e#d#
#E#f#f#e#c#t#####C#l#a#s#s#i#-#f#i#c#a#t#i#o#n#####A#s#s#e#t#s# #(#e#x#c#e#p#t#
#c#a#s#h# #a#n#d# #c#a#s#h# #e#q#u#i#v#a#l#e#n#t#s#)#####C#u#r#r#e#n#t#
#a#s#s#e#t#s#:###########################A#c#c#o#u#n#t#s# #r#e#c#e#i#v#a#b#l#e#
###+#8#0#####U#s#e###### 8#0#####�80##Operating##Inventory
#�35##Source##+35####+35##Operating##Prepaid expenses
#+2##Use##�2####�2##Operating##Noncurrent assets:#############Plant and
equipment
#+80##Use##�80##�30##�110##Investing##Long-term investments
#�7##Source##+7##�7##0##Investing###############Liabilities, Contra
assets, and Shareholders� Equity##Contra assets:#############Accumulated
depreciation
#+15##Source##+15##+10##+25##Operating##Current
liabilities:#############Accounts payable
#+75##Source##+75####+75##Operating##Accrued liabilities
#�10##Use##�10####�10##Operating##Noncurrent
liabilities:#############Bonds payable
#+25##Source##+25####+25##Financing##Deferred income taxes
#+8##Source##+8####+8##Operating##Shareholders�
equity:#############Ordinary shares #�40##Use##�40####�40##Financing##Retained
earnings:#############Net income
#+56##Source##+56####+56##Operating##Dividends
#�16##Use##�16####�16##Financing###############Additional
entries##Proceeds from sale of equipment #######+18##+18##Investing##Loss on
sale of equip#m#e#n#t#
###############+#2#####+#2#####O#p#e#r#a#t#i#n#g#####P#r#o#c#e#e#d#s#
#f#r#o#m# #s#a#l#e# #o#f# #l#o#n#g#-#t#e#r#m# #i#n#v#e#s#t#m#e#n#t#s#
###############+#1#2#####+#1#2#####I#n#v#e#s#t#i#n#g#####G#a#i#n# #o#n#
#s#a#l#e# #o#f# #l#o#n#g#-#t#e#r#m# #i#n#v#e#s#t#m#e#n#t#s#
###########�#�#�#�#�###### # 5###### # #
5#####O#p#e#r#a#t#i#n#g###############################T#o#t#a#l# ############ #
7###### # 0###### # # 7#################I#I#.# #P#r#o#b#l#e#m#s###P#r#o#b#l#e#m#
#1# ###T#r#a#n#saction#Operating#Investing#Financing#Source#Use##Short-term
investment securities were purchased
#X####X##Equipment was purchased
##
X###X##Accounts payable increased #X###X###Deferred taxes decreased #X####
X##Long-term bonds were issued
###X#X###Ordinary shares were sold ###X#
X###Interest was paid to long-term creditors
#X####X##A long-term mortgage was
entirely paid off ###X##X##A cash dividend was declared and paid ###X##
X##Inventories decreased
#X###X###Accounts receivable increased
#X####
X##Depreciation charges totaled P200,000 for the year #X###X###Problem 2
(Analysis of Cash Flow Transactions)Requirement (a)The eight items should be
presented in the statement of cash flows as follows:1.
Net income is the
basis for the calculation of cash flows from operating activities by starting
with that number and adjusting for noncash revenue and expense transactions
(indirect method) or by computing by the direct method the positive cash flows
from revenues, less the negative cash flows from expenses. The cash flows from
the transaction giving rise to the extraordinary loss is reclassified as an
investing activity.2.
The acquisition of intangibles is a negative cash flow
from investing activities. The amortization is a noncash expense in determining
cash flows from operating activities.3. The payment of a cash dividend is a
negative cash flow that is presented in the financing activities section of the
statement.4.
The purchase of treasury share is a negative cash flow in the
financing activities section of the statement.5.
The depreciation expense
recognized during the year is a noncash expense in determining cash flows from
operating activities.6. The conversion of convertible bonds into ordinary shares
is a noncash financing activity that requires disclosure in a separate schedule.
7.
The changes in plant asset accounts � land, equipment, and building �
represent activities whose cash flow effects are presented in the investing
activities section of the statement.8.
The increase in working capital also
represents the change in cash because all other current assets and current
liabilities remained constant. The net of all cash flows from operating,
investing and financing activities must reconcile with the change in cash in the
statement of cash flows.Requirement (b)1. Net cash provided by operating
activities
Net income P145,000
Noncash expense adjustments:
Depreciation expense
46,250
Amortization expense
6,000
Reclassification of extraordinary loss
15,000
P212,2502. Net cash used in investing activities
Purchase of intangible assets P (34,000)
Purchase of land (130,000)
Purchase of equipment
(60,000)
Purchase of building
(100,000)
Sale of land
165,000
P(159,000)3.
Net cash used in financing activities
Purchase
of treasury shares
P(31,000)
Payment of dividends
(12,500)
P(43,500)Computations: Depreciation expense
Change in accumulated depreciation account
P35,000
Accumulated depreciation on fully depreciated
assets disposed
11,250
P46,250
Purchase of land
Change in
land account
P (50,000)
Cost of land sold in condemnation
proceedings
180,000
P130,000Problem 3 (Cash Flow from
Operating Activities)Cash received from customers:
Total revenues
P185,000
Less: Note receivable
(15,000)
P170,000Cash disbursed for
expenses:
Total expenses (P173,000 + P4,200) P177,200
Less:
Income
taxes deferred
(1,260)
Depreciation
(25,000)
Amortization
(7,000)
(143,940)Net cash provided by
operating activities
P 26,060
Problem 4 (Cash Flow from Operating
Activities)Cash received from customers (1)
P5,237,000Cash paid for
expenses:
Cost of goods sold
P3,150,000 Selling
246,000
Salaries and wages (2) 394,400
Interest (3)
65,200
Miscellaneous operating 5,000 Incomes taxes (4)
335,000
4,195,600Net
cash provided by operating activities
P1,041,400Computations:1.
Revenue from sales
P5,432,000 Less:
Note receivable
(120,000)
Land
(75,000)
P5,237,000 2.
Salaries and wages expense
P
400,000 Less: Increase in accrued
salaries and wages
(P45,600 � P40,000)
(5,600)
P
394,400 3.
Interest expense P
72,000
Less: Discount amortization
(6,800)
P
65,2004.
Income tax expense
P
445,000 Less: Deferred portion
(110,000)
P
335,000Problem 5 (Statement of Cash
Flows Preparation � Indirect)Green Tea CompanyStatement of Cash FlowsFor the
Year Ended December 31, 2005Cash flows from operating activities ####Net
income*#P8,500###Adjustments to reconcile net income to net cash flows provided
by operating activities:####Depreciation#1,000###Amortization of
intangibles#1,000###Increase in current assets# (6,000)###Increase in current
liabilities# 3,000### Net cash provided by operating
activities##P7,500######Cash flows from financing activities####Dividends
paid#(1,500)###Retirement of long-term liabilities#(1,000)###
Net cash used
in financing activities##
(2,500)##Net increase in cash##P 5,000##Cash,
January 1, 2005## 10,000##Cash, December 31, 2005##P15,000##Problem 6 (Cash
Flow Statement Preparation � Direct)Requirement (a) Hundred Acre Company
Statement of Cash FlowsFor the Year Ended December 31, 2005Cash flows from
operating activities ####Cash received from customers#P74,000###Cash paid for
expense# 67,000###
Net cash provided by operating activities##P7,000##Cash
flow from investing activities#### Sale of equipment#9,500###
Sale of
investments#15,000###
Acquisition of equipment# (53,000)###
Net cash
used in investing activities##(28,500)##Cash flows from financing
activities####Sale of ordinary shares#40,000###Payment of cash dividends#
(8,500)### Net cash used in financing activities## 31,500##Net increase in
cash##P10,000##Cash, January 1, 2005## 20,000##Cash, December 31,
2005##P30,000##Reconciliation of net income to net cash provided by operating
activities:####Net income#P15,000###Adjustments to reconcile net income to net
cash provided by operating activities:####Depreciation
expense#24,500*###Amortization expense#1,000###Increase in accounts
receivable#(33,000)###Decrease in accrued expenses#
(500)###Net cash
provided by operating activities#P 7,000###Computations:Cash received from
customers:
Revenues
P107,000
Deduct: Increase in
accounts receivable
(P78,000 � P45,000)
33,000
P 74,000Cash paid for expenses:
Expenses
P
92,000
Add: Decrease in accrued expenses
(P7,500 � P7,000) 500
Deduct: Depreciation expense
(P33,600 � P27,100 +
P18,000)
(24,500)
Amortization
(1,000)
P 67,000Cash from sale of equipment:
Cost
P
27,500
Deduct: Accumulated depreciation
(18,000) Cash received
on sale at book value
P
9,500Cash paid to acquire equipment: Increase in
property, plant and equipment
(P118,100 � P92,600)
P 25,500
Cost of machinery sold
27,500
P 53,000Cash
received on sale of shares:
Increase in ordinary shares amount
(P100,000 � P75,000)
P 25,000
Increase in additional paid-in capital
account
(P55,000 � P40,000)
15,000
P
40,000Cash dividends:
Increase in retained earnings (P21,000 � P14,500)
P
6,500
Net income (P107,000 � P92,000)
(15,000)
P
8,500Requirement (b)The reconciliation of net income to net cash
provided by or used in operating activities is required to be disclosed in order
to show more clearly the relationship and emphasize the differences between the
two. Users of financial statements are often not as aware of the accrual
concepts, which determine net income, as are preparers of those statements. The
reconciliation of net income to net cash flows from operating activities clearly
demonstrates that the two are different and details those events and
transactions that account for the difference.Problem 7 (Interpretation of Cash
Flow Statement)Requirement (a)The two companies are similar in the following
respects:
1.
Overall size.2.
Industry in which they operate.3. Current
ratio (2.4 to 1).4.
Overall peso amounts of cash provided and used:#########
####### #######,###�###�###K ##N
##�###�###�###�
##�
##9###:###�###�###_###e###g###h###~###�###�###�###�###���qg]���SI�ࡱuku^TFTuk###h
Y[�##h�M##6#�CJ##mH
#sH
###h�M##CJ##mH
#sH
####h6$N##h�#�#CJ##mH
#sH
####h/Z^#CJ##mH
#sH
####h�#�#CJ##mH
#sH
####h�e�#CJ##mH
#sH
####hY[�#CJ##mH
#sH
####h�#�#CJ##mH
#sH
####h6$N#CJ##mH
#sH
####h�wM#CJ##mH
#sH
####h�Z�##h�e�#5#�6#�CJ##mH
#sH
####h6$N##h�e�#CJ##mH
#sH
####h6$N##h�e�#CJ##mH
#sH
####h6$N##h�e�#5#�CJ##OJ##QJ##mH
#sH
###h6$N##h\A�#5#�CJ##OJ##QJ##mH
#sH
#######
############### ###-###U###u###�###�###K ##�###�
##�
##�###�###�###�###�############�############�############�############�#########
###�############�############�############�############�############�###########
#�############�############�############�############�############�############�
###############################$##�8##���#�x#^�8#`���a$#gd�#"######$##��##���#��
#^��#`���a$#gd�#"######$##��##���^��#`���a$#gd�#"######$##��##���#�x#^��#`���a$#
gd�#"####$#
&##F###��#a$#gd�#"######$#a$######$#a$#######��##��##J�##K�##����###############
################################################################################
################################################################################
################################################################################
################################################################################
################################################################################
#########################################################################�###+##
#h###�#######2###{###�###(###�###5###6###K###}###�###�###�###�###�############�#
###########�############�############�############�############�############�###
#########�############�############�############�############�############�#####
#######�############�############�##############################################
############$#
�###�#�#�p##���^�p#`���a$#gd�#"######$##��##���^��#`���a$#gd�#"######$##�8##���#
�x#^�8#`���a$#gd�#"######$##��##���#��#^��#`���a$#gd�#"######$##�8##���^�8#`���a
$#gd�#"###�###�###�###�###�###(###�###�###�###�###�###�###�###�###4###5###6###�#
##�###�###�###�###�###�###�###�###�###�###�����ǽ��ǩ�����}odo}Z�P�P}#############
##########h#]�#CJ##mH
#sH
####h�#"#CJ##mH
#sH
####h�{u#>*#CJ##mH
#sH
###h�{u##h�{u#>*#CJ##mH #sH
###h�{u#CJ##mH
#sH
####h�e�#CJ##mH
#sH
####h�Vj##h�1H#6#�CJ##mH
#sH
###h�1H#CJ##mH
#sH
####h;3m#CJ##mH
#sH
####h�HX#CJ##mH
#sH
####h�k�#CJ##mH
#sH
####h�#?#CJ##mH
#sH
####hY[�##h�M##6#�CJ##mH
#sH
###h�M##CJ##mH
#sH
####h6$N##h�#�#CJ##mH
#sH
####h�#�#CJ##mH
#sH
##�###�###�#######�#######k###�###� ##5!##�!######�####%##�%##�
%##�############�############�############�############�############�###########
#�############�############�############�############�############�############�
############�############�##########################
###$##��##���^��#`���a$######$#�###�###�8##�0�#�x#^�8#`�0�a$#gd�#"######$#
�###�###�8##�0�#��#^�8#`�0�a$#gd�#"######$##��##���#��#^��#`���a$#gd�#"######$#
�###�#�#�8##�0�#�x#^�8#`�0�a$#gd�#"######$#
�###�#�#�8##�0�#��#^�8#`�0�a$#gd�#"###�###�###�###2###########�###�###�###�#####
######�###�###�###�###$ ##% ##� ##� ##�!##�!##�!##�!###"##
"##�"##�"##################`###a###�###�###�###�###�###�###[$##\
$##�$##�$##�$##�$###%## %##r%##s%##�%##�%##�%##�%##�
%##���������������������������������������������������####h�K`#CJ##mH
#sH
####h##E#CJ##mH
#sH
####h#f[##h#f[#CJ##NH##mH
#sH
####h#f[##h#f[#CJ##mH
#sH
####h#f[#CJ##mH
#sH
####h�
�#CJ##mH
#sH
####h�f{#CJ##mH
#sH
####h�9##CJ##mH
#sH
####h1r\#CJ##mH
#sH
####h#)�#CJ##mH
#sH
####h�###CJ##mH
#sH
#6�%##�%##�%##�%##�%##�%##�
%##�%##�%###&##
&###&##�############�############�############�############�############�#######
#####�############�############�############�############�######################
################################################################################
#############################################################################�e#
#d�####$#If####]�e#gdD#�####�## ##�#
#d�####$#If####gdD#�######$##�h#^�h#a$#gdD#�######$##�h#^�h#a$#gdY#�######$#a$#g
dY#�##
###$##��##���^��#`���a$###�%##�%##�%##�%##�%##�%##�%##�%##�%###&##
&##&###&###&##H&##J&##K&##n&##o&##w&##x&##�&##�&##�&##�&##�&##�&##�&##�&##�&##
'###'###'##4'##='##>'##a'##d'##����Ƹ�?�
�x��x���x��x��x��x��x��x�f#################h#E�##hY#�#>*#CJ##KH##OJ##QJ##aJ####h
#E�##hY#�#KH##aJ### #h#E�##h�T4#CJ##KH##OJ##QJ##aJ###
#h#E�##hY#�#CJ##KH##OJ##QJ##aJ###$#h#E�##hY#�#CJ##KH##OJ##QJ##^J##aJ#####h6$N##h
Y#�#5#�CJ##mH
#sH
###hY#�#5#�CJ##mH #sH
###h6$N##hY#�#6#�CJ##mH #sH
###hY#�#5#�6#�CJ##mH
#sH
####hY#�#CJ##mH
#sH
####h�#"#CJ##mH
#sH
#
%#&###&##H&##I&##J&##�############�############�############�###################
################################################################################
################################################################################
#########################�e##d�####$#If####]�e#gdD#�####�## ##�#
#d�####$#If####gdD#�##[##kd#####$##$#If#####�F##h#�#�#!###�
##################M###################H##################�#|##�####�####�
###�###�###�#�
###�###�###�#�
###�###�###�#�
###�###�###�3�#######a�#v###J&##K&##n&##v&##w&##�############�############~#####
#######n########################################################################
################################################################################
############�e##d�####$#If####]�e#gdD#�#####�9##d�####$#If####]�9#gdBL�####�##
##�#
#��##d�####$#If####^��#gdD#�##[##kdࡱ####$##$#If#####�F##h#�#�#!###�
##################M###################H##################�#|##�####�####�
###�###�###�#�
###�###�###�#�
###�###�###�#�
