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Cash Flow

The document contains the income statement and statement of cash flows for Robyn Company for the year ended December 31, 2019. The income statement shows a net loss of ₱40,000 while the statement of cash flows shows an increase in cash of ₱85,000 from operating, investing, and financing activities. The statement of cash flows is presented using both the indirect and direct methods.

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Nathaniel Tan
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42 views

Cash Flow

The document contains the income statement and statement of cash flows for Robyn Company for the year ended December 31, 2019. The income statement shows a net loss of ₱40,000 while the statement of cash flows shows an increase in cash of ₱85,000 from operating, investing, and financing activities. The statement of cash flows is presented using both the indirect and direct methods.

Uploaded by

Nathaniel Tan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Problem 1

Robyn Company
Income Statement
For the Year Ended December 31, 2019

Sales ₱370,000.00
Cost of Goods Sold 258,000.00
Gross Income 112,000.00
Total Operating Expenses 160,000.00
Operating Income (48,000.00)

Other Income and Expenses


Interest Income 6,000.00
Gain on Sale of Investments 5,000.00
Interest Expense (3,000.00)
Total Other Income and Expenses 8,000.00

Net Income (₱40,000)


Robyn Company
Statement of Cash Flows
For the Year Ended December 31, 2019

Cash Flow from Operating Activities


Net Income (40,000.00)
Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities:
Depreciation 55,000.00
Gain from Sale of Investment (5,000.00) 50,000.00
Net Cash Flow: Operating Activities 10,000.00

Cash Flow from Investing Activities


Sale of Investment 80,000.00
Purchase of Fixtures and Equipment (340,000.00)
Purchase of Investment (75,000.00)
Net Cash Flow: Investing Activities (335,000.00)

Cash Flow from Financing Activities


Sale of Capital Stock 420,000.00
Purchase of Treasury Stock (10,000.00)
Net Cash Flow: Financing Activities 410,000.00

Total Cash Flow Increase (Decrease) 85,000.00


Cash Balance, January 1, 2019 140,000.00
Cash Balance, December 31, 2019 ₱225,000.00

I agree with Robyn in that, in the end, there is a net increase in cash of 85,000.
Problem 2

Indirect Method

Robyn Company
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash Flow from Operating Activities
Net Income ₱125,000.00
Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities:
Depreciation ₱33,000.00
Loss on Sale of Equipment 2,000.00
Accounts Receivable Increase (42,000.00)
Inventory Increase (54,000.00)
Prepaid Expenses Decrease 2,000.00
Accounts Payable Decrease (17,000.00)
Accrued Expenses Payable Increase 10,000.00 (66,000.00)
Net Cash Flow: Operating Activities 59,000.00

Cash Flow from Investing Activities


Sale of Equipment 34,000.00
Sale of Land 25,000.00
Purchase of Equipment (166,000.00)
Net Cash Flow: Investing Activities (107,000.00)

Cash Flow from Financing Activities


Common Stock Issued for Cash 130,000.00
Payment of Dividends (55,000.00)
Payment of Bonds Payable (10,000.00)
Net Cash Flow: Financing Activities 65,000.00

Total Cash Flow Increase (Decrease) 17,000.00


Cash Balance, January 1, 2019 37,000.00
Cash Balance, December 31, 2019 ₱54,000.00

Noncash investing and financing activities

Conversion of bonds into common stock ₱30,000


Direct Method

Robyn Company
Statement of Cash Flows
For the Year Ended December 31, 2019

Cash Flow from Operating Activities

Cash Collected from Customers ₱848,000.00

Cash Payments:
To Supplier for Inventory (₱536,000.00)
For Operating Expenses (176,000.00)
For Interest Expense (12,000.00)
For Income Tax Expense (65,000.00) (794,000.00)
Net Cash Flow: Operating Activities 59,000.00

Cash Flow from Investing Activities


Sale of Equipment 34,000.00
Sale of Land 25,000.00
Purchase of Equipment (166,000.00)
Net Cash Flow: Investing Activities (107,000.00)

Cash Flow from Financing Activities


Common Stock Issued for Cash 130,000.00
Payment of Dividends (55,000)
Payment of Bonds Payable (10,000)
Net Cash Flow: Financing Activities 65,000.00

Total Cash Flow Increase (Decrease) 17,000.00


Cash Balance, January 1, 2019 37,000.00
Cash Balance, December 31, 2019 ₱ 54,000.00

Noncash investing and financing activities

Conversion of bonds into common stock ₱30,000

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