STRATEGIC COST MANAGEMENT

STATEMENT OF CASH FLOW – START OF FINAL PERIOD

PROF. ALBERT DC CHAN, CPA, MBA
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Ex. 167
Selected transactions of Alton Company are listed below.
1. Common stock is sold for cash above par value.
2. Bonds payable are issued for cash at a discount.
3. Interest receivable on a short-term note receivable is
collected.
4. Land is sold for cash at book value.
5. Accounts payable are paid in cash.
6. Equipment is purchased by signing a 3-year, 10% note
payable.
7. Cash dividends on common stock are declared and paid.
8. 100 shares of XYZ common stock are purchased for cash.
9. Merchandise is sold to customers for cash.
10. Bonds payable are converted into common stock.

Instructions
Classify each transaction as either (a) an operating activity, (b) an
investing activity, (c) a financing activity, or (d) a noncash
investing and financing activity.

Ex. 168
(a) Identify several alternatives for presenting significant noncash
activities in financial statements.
(b) Give three examples of significant noncash transactions.

Ex. 169
The following information is available for Segway Company:
Receipts from customers Php210,000
Dividends from stock investments 3,000
Proceeds from sale of equipment 18,000
Proceeds from issuance of stock 90,000
Payments for goods 100,000
Payments for operating expenses 75,000
Interest paid 5,000
Taxes paid 4,000
Dividends paid 20,000

Instructions
Based on the preceding information, compute the net cash
provided by operating activities.
Ex. 170
Plough Company reported net income of Php180,000 for the
current year. Depreciation recorded on buildings and equipment
amounted to Php80,000 for the year. Balances of the current
asset and current liability accounts at the beginning and end of
the year are as follows:
End of Year Beginning of Year
Cash Php20,000 Php15,000
Accounts receivable 24,000 32,000
Inventories 50,000 65,000
Prepaid expenses 9,500 5,000
Accounts payable 12,000 18,000
Income taxes payable 1,600 1,200

Instructions
Prepare the cash flows from the operating activities section of the
statement of cash flows using the indirect method.
Ex. 171
Nexis Company reported net income of Php140,000. For 2013,
depreciation was Php45,000, and the company reported a gain on
sale of investments of Php10,000. Accounts receivable increased
Php25,000 and accounts payable decreased Php20,000.
Instructions
Compute net cash provided by operating activities using the
indirect method.

Ex. 173
A comparative balance sheet for Rocker Company appears below:
ROCKER COMPANY
Comparative Balance Sheet
Dec. 31, 2013 Dec. 31,
2012
Assets
Cash Php 33,000
Php10,000
Accounts receivable 18,000 14,000
Inventory 25,000 18,000
Prepaid expenses 6,000 9,000
Long-term investments -0- 18,000
Equipment 60,000 32,000
Accumulated depreciation—equipment (20,000) (14,000)
Total assets Php122,000 Php87,000

Liabilities and Stockholders' Equity

Accounts payable Php 17,000 Php 7,000
Bonds payable 37,000 47,000
Common stock 40,000 23,000
Retained earnings 28,000 10,000
Total liabilities and stockholders' equityPhp122,000Php87,000

Ex. 173 (Cont.)

Additional information:
1. Net income for the year ending December 31, 2013 was
Php33,000.
2. Cash dividends of Php15,000 were declared and paid during
the year.
3. Long-term investments that had a cost of Php18,000 were sold
for Php14,000.
4. Sales for 2013 were Php120,000.

Instructions
Prepare a statement of cash flows for the year ended December
31, 2013, using the indirect method.
Ex. 174
A comparative balance sheet for Halpern Corporation is presented
below:
HALPERN CORPORATION
Comparative Balance Sheet
2013
2012
Assets
Cash Php 36,000
Php 31,000
Accounts receivable (net) 70,000 60,000
Prepaid insurance 25,000 17,000
Land 18,000
40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000)
Total Assets Php199,000 Php195,000

Liabilities and Stockholders' Equity

Accounts payable Php 11,000 Php 6,000
Bonds payable 27,000 19,000
Common stock 140,000 115,000
Retained earnings 21,000 55,000
Total liabilities and stockholders' equityPhp199,000
Php195,000

Additional information:
1. Net loss for 2013 is Php20,000.
2. Cash dividends of Php14,000 were declared and paid in 2013.
3. Land was sold for cash at a loss of Php4,000. This was the only
land transaction during the year.
4. Equipment with a cost of Php15,000 and accumulated
depreciation of Php10,000 was sold for Php5,000 cash.
5. Php22,000 of bonds were retired during the year at carrying
(book) value.
6. Equipment was acquired for common stock. The fair value of
the stock at the time of the exchange was Php25,000.

Instructions
Prepare a statement of cash flows for the year ended 2013, using
the indirect method.

Ex. 175
The following information is available for Modre Corporation for
the year ended December 31, 2013:

Collection of principal on long-term loan to a supplier

Php15,000
Acquisition of equipment for cash 10,000
Proceeds from the sale of long-term investment at book value
22,000
Issuance of common stock for cash 25,000
Depreciation expense 30,000
Redemption of bonds payable at carrying (book) value34,000
Payment of cash dividends 14,000
Net income 20,000
Purchase of land by issuing bonds payable 40,000

In addition, the following information is available from the

comparative balance sheet for Modre at the end of 2012 and
2013:

2013
2012
Cash Php 67,000 Php14,000
Accounts receivable (net) 20,000 15,000
Prepaid insurance 17,000 13,000
Total current assets Php104,000 Php42,000

Accounts payable Php 30,000 Php19,000

Salaries payable 4,000 7,000
Total current liabilities Php 34,000 Php26,000

Instructions
Prepare Modre's statement of cash flows for the year ended
December 31, 2013 using the indirect method.

Ex. 176
Towson Company prepared the tabulation below at December 31,
2013.
Net Income......................................................................
........................................................................................
Php340,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation expense, Php43,000............................. _______
Increase in accounts receivable, Php50,000.............. _______
Decrease in inventory, Php13,000............................. _______
Amortization of patent, Php4,000.............................. _______
Increase in accounts payable, Php5,600.................... _______
Decrease in interest receivable, Php7,000................. _______
Increase in prepaid expenses, Php6,000.................... _______
Decrease in income taxes payable, Php1,500........... _______
Gain on sale of land, Php5,000.................................. _______
Net cash provided (used) by operating activities....... _______
Instructions
Show how each item should be reported in the statement of cash flows.
Use parentheses for deductions.

Ex. 177
The current sections of Marie Inc.'s balance sheets at December
31, 2012 and 2013, are presented here.
Marie's net income for 2013 was Php200,000. Depreciation
expense was Php24,000.
2013
2012
Current assets
Cash Php115,000 Php99,000
Accounts receivable 105,000 89,000
Inventory 153,000 172,000
Prepaid expense 27,000 22,000
Total current assets Php400,000 Php382,000
Current liabilities
Accrued expenses payable Php 15,000 Php 5,000
Accounts payable 85,000 92,000
Total current liabilities Php100,000 Php 97,000

Instructions
Prepare the net cash provided by operating activities section of
the company's statement of cash flows for the year ended
December 31, 2013, using the indirect method.

Ex. 178
Wayne Company reported net income of Php265,000 for 2013.
Wayne also reported depreciation expense of Php45,000 and a
loss of Php8,000 on the sale of equipment. The comparative
balance sheet shows a decrease in accounts receivable of
Php15,000 for the year, a Php17,000 increase in accounts
payable, and a Php6,000 decrease in prepaid expenses.

Instructions
Prepare the operating activities section of the statement of cash
flows for 2013. Use the indirect method.

END