CHAPTER 46

CASH FLOW-COMPREHENSIVE
Problem 46-1

Stonewall Company provided the following comparative statement of financial positionn at year-
end:
2023 2022
Cash 1,550,000 400,000
Accounts receivable 1,400,000 950,000
Investments, at cost 200,000 350,000
Property, plant and equipment 1,800,000 1,300,000
Accumulated depreciation (600,000) (450,000)
Accounts payable 950,000 750,000
Share capital 2,500,000 1,000,000

Retained earnings An investment was sold for P250,000 during the current year. There was no
disposal of property, plant and equipment during the current year.
The net income for the current year was P600,000. A dividend of P500,000 was paid on
December 31, 2023.

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash provided by financing activities?

SOLUTION REFER TO CHAPTER 46-1 PAGE 590

Problem 46-2
Eagle Company provided the following data:
2023 2022

Cash 350,000 150,000

Accounts receivable, net 840,000 580,000
Merchandise inventory 600,000 420,000
Prepaid expenses 50,000 100,000
Long term investment 80,000 -
Property, plant and equipment 1,130,000 600,000
Accumulated depreciation 110,000 50,000
Accounts payable 530,000 440,000
Accrued expenses 140,000 130,000
Dividend payable 70,000 -
Note payable long term debt 500,000 -
Share capital 1,200,000 900,000
Retained earnings 560,000 330,000
Net income 400,000 280,00

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

2. What amount should be reported as net cash provided by financing activities?
3. What amount should be reported as net cash used in investing activities?

SOLUTION REFER TO CHAPTER 46 -2 PAGE 592

Problem 46-3
Divine Company provided the following information for the preparation of a statement of cash
flows:
2023 2022
Assets
Cash 460,000 200.000
Trading investments 600,000 -
Accounts receivable, net 1,020,000 1,020,000
Inventory 1,360,000 1,200,000
Long-term investments 400,000 600,000
Property, plant and equipment 3,400,000 2,000,000
Accumulated depreciation (900,000) ( 900,000)
Patent 180,000 200,000
Total assets 6,520,000 4,320,000

Liabilities and Shareholders' Equity

Accounts payable and accrued liabilities 1,650,000 1,440,000
Short-term debt 650,000 -
Share capital, P20 par 1,600,000 1,400,000
Share premium 740,000 500,000
Retained earnings 1,880,000 980,000
Total liabilities and shareholders' equity 6,520,000 4,320,000

 Net income for 2023 was P1,380,000.

 Cash dividends of P480,000 were declared and paid in 2023.
 Equipment costing P800,000 and having a carrying amount of P300,000 was sold in 2023
for P300,000.
 A long-term investment was sold in 2023 for P270,000. There were no other transactions
affecting long-term investments in 2023.
 10,000 shares were issued in 2023 for P44 a share.
 The trading investments were purchased for cash on December 31, 2023.

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash provided by financing activities?

SOLUTION REFER TO CHAPTER 46 -3 PAGE 595

Problem 46-4
Florida Company provided the following comparative statement:
2023 2022

Cash and cash equivalents 5,600,000 7,400,000

Accounts receivable 3,000,000 3,500,000
Inventory 8,000,000 6,500,000
Prepaid expenses 400,000 600,000
Property, plant and equipment 55,000,000 42,000,000
Accumulated depreciation (20,000,000) (16,000,000)
Accounts payable 6,000,000 9,500,000
Accrued expenses 1,500,000 500,000
Note payable - bank (current) 2,000,000 5,000,000
Note payable - bank (noncurrent) 10,000,000 -
Ordinary share capital 30,000,000 30,000,000
Retained earnings 2,500,000 (1,000,000)

Cash needed to purchase new equipment and to improve the working capital position was raised
by borrowing from bank with a long-term note.
Equipment costing P2,000,000 and carrying amount of P1,500,000 was sold for P2,500,000.
The entity paid cash dividend of P3,000,000 in 2023. There were no entries in the retained
earnings account other than to record dividend and net income for 2023.

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash provided by financing activities?

SOLUTION REFER TO CHAPTER 46-4 PAGE 597

Problem 46-5
Beal Company reported the following changes in the statement of financial position accounts for
the current year:
Increase
(Decrease)
Assets
Cash and cash equivalents 120,000
Short-term investments 300,000
Accounts receivable, net -
Inventory 80,000
Long-term investments (100,000)
Property, plant and equipment 700,000
Accumulated depreciation -
1,100,000
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities (5,000)
Dividend payable 160,000
Short-term bank debt 325,000
Long-term debt 110,000
Ordinary share capital, P10 par 120,000
Share premium 290,000
Retained earnings 1,100,000

 The following additional information relates to the current year:

 Net income for the current year was P790,000.
 Cash dividend of P500,000 was declared.
 Equipment costing P600,000 and having a carrying amount of P350,000 was sold for
P350,000. Equipment costing P110,000 was acquired through issuance of long-term debt.
A
 long-term investment was sold for P135,000. There were no other transactions affecting
long-term investments.
 10,000 ordinary shares were issued for P22 a share

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash provided by financing activities?

SOLUTION REFER TO CHAPTER 46 -5 PAGE 60

Problem 46-6
Simplex Company provided the following comparative statement of financial position:
2023 2022
Cash 2,300,000 1,500,000
Accounts receivable 1,150,000 1,200,000
Inventory 2,000,000 1,800,000
Property, plant and equipment 6,400,000 3,000,000
Accumulated depreciation (1,150,000) (1,000,000)
Investment in Belle Company 3,200,000 3,000,000
Loan receivable 800,000 -
Accounts payable 1,000,000 1,500,000
Income tax payable 50,000 250,000
Dividend payable 1,000,000 1,500,000
Finance lease liability 3,800,000 -
Ordinary share capital 5,000,000 5,000,000
Share premium 500,000 500,000
Retained earnings 3,350,000 1,350,000

 Net income for 2023 was P3,000,000.

 On December 31, 2022, Simplex Company acquired 25% of Belle Company's ordinary
shares for P3,000,000. Belle Company reported net income of P1,200,000 for 2023 and
paid cash dividend of P400,000 on ordinary shares during the current year.
 During 2023, Simplex Company loaned P1,000,000 to Chase Company, an unrelated
entity. Chase Company made the first semiannual principal repayment of P200,000, plus
interest of 10%, on October 1, 2023. No accrual of interest was made on December 31,
2023.
 On January 1, 2023, Simplex Company sold equipment costing P600,000, with a carrying
amount of P350,000 for P400,000 cash.
 On January 1, 2023, Simplex Company entered into a finance lease for an office building.
The present value of the annual rental payments is P4,000,000, which equals the fair
value of the building. Simplex Company made the first rental payment of P600,000 when
due on December 31, 2023. The payment includes an implicit interest of P400,000.
 Simplex Company declared cash dividend in one year and paid the dividend in the
subsequent year.

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash used in financing activities?
Problem 46-7
Mega Company gathered the following information about changes which took place during the
current year:
Increase (Decrease)
Cash (150,000)
Accounts receivable, net 300,000
Inventory, 1,500,000
Property Plant and equipment 500,000
Accumulated depreciation 180,000
Intangible asset, n asset, net of amortization 275,000
Accrued expenses 50,000
Accounts payable 320,000
Note payable short-term debt 700,000
Bonds payable 250,000
Ordinary share capital, P10 par 125,000
Share premium 200,000
Retained earnings 600,000

Equipment with original cost of P200,000 and a carrying amount of zero was thrown away.
Equipment with a cost of P150,000 and accumulated depreciation of P100,000 was sold for
P50,000. Some new equipment was purchased during the year.
An intangible asset was acquired during the year for 25,000 ordinary shares. Each share was
selling for P13 at that time.
The entity retired P2,500,000 of 10% bonds at par and issued P2,750,000 of 8% bonds at par.
The income statement reported revenue of P7,000,000 and expenses es of P5,000,000 for the
current year.

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash used in financing activities?
Problem 46-8

New World Company recorded the following transactions during the current year
 Net income was P2,900,000 which included P300,000 loss resulting from the
expropriation of land by the city government. The entity received P3,300,000 for the land
carried at P3,600,000.
 Patent account increased by P560,000 during the year, representing acquisition of
P680,000 and amortization of P120,000.
 Property, plant and equipment had a net increase of P2,200,000. Accumulated
depreciation was P4,200,000 ending and P3,270,000 beginning
 Cash dividends of P250,000 were declared and paid.
 Treasury shares with par value of P400,000 were acquired for P620,000 cash.
 All current assets and current liabilities other than cash remained unchanged during the
year.
 Working capital increased by P200,000 during the year.

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

2. What amount should be reported as net cash used in investing activities?
3. What amount should be reported as net cash used in financing activities?