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Cash Flow Direct Indirect

The document summarizes the cash flow statement for a company using both the direct and indirect method. For operating activities using the indirect method, net income was $103,250 and after adjusting for non-cash expenses like depreciation and changes in working capital, cash from operating activities was $51,975. For investing activities, $15,925 was consumed through the purchase and sale of equipment. For financing activities, $67,900 was consumed through dividend payments and adjusting long-term debt.

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Talha Hassan
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63 views

Cash Flow Direct Indirect

The document summarizes the cash flow statement for a company using both the direct and indirect method. For operating activities using the indirect method, net income was $103,250 and after adjusting for non-cash expenses like depreciation and changes in working capital, cash from operating activities was $51,975. For investing activities, $15,925 was consumed through the purchase and sale of equipment. For financing activities, $67,900 was consumed through dividend payments and adjusting long-term debt.

Uploaded by

Talha Hassan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Cassh Flow Statement (Indirect Method)

Cash Flow from Operaing Activity:


Net income 103,250.00
Loss on sales of equipment 7,175.00
110,425.00
add: Depreciation Expense 26,250.00
Net Income on Cash Basis 136,675.00

∆ in Working Capital
Increase in Accounts Receivable - 21,525.00
Increase in Inventory - 29,750.00
Decrease in Prepaid Rent 1,225.00
Decrease in Accounts Payable - 39,900.00
Increase in S.T.N. Payables 5,250.00
- 84,700.00
Cash Generates from Operating Activities 51,975.00

Cash Flow from Investing Activity:


Sales of Equipment 19,075.00
Purchase of Equipment - 35,000.00
Cash Consumed by Investing Activities - 15,925.00

Cash Flow from Financing Activity:


Cash Dividend - 86,975.00
Decrease in Long Tem Note Payable - 43,925.00
Issuance of Shares (3500*18) 63,000.00
Cash Consumed by Financing Activities - 67,900.00

Net Decrease In Cash - 31,850.00

Balance Sheet
Net Change 2005 2004
Assets
Cash - 31,850.00 75,425.00 107,275.00
Account Receivable 21,525.00 91,000.00 69,475.00
Inventory 29,750.00 383,250.00 353,500.00
Prepaid Rent - 1,225.00 7,525.00 8,750.00
Equipment 69,300.00 223,300.00 154,000.00
Accumulated Depreciation 13,125.00 - 48,475.00 - 61,600.00
TOTAL ASSETS 100,625.00 732,025.00 631,400.00

Equities
Account Payble - 39,900.00 123,375.00 163,275.00
Short Term Note Payable 5,250.00 14,000.00 8,750.00
Long Term Note Payable 56,000.00 131,250.00 75,250.00
Share Capital 63,000.00 281,750.00 218,750.00
Retain Earning 16,275.00 181,650.00 165,375.00
TOTAL EQUITIES 100,625.00 732,025.00 631,400.00

Income Statement

Sales 694,750.00
less: Cost of Goods Sold - 350,000.00
Gross Profit 344,750.00

Less: Operating Expenses:


Depreciation Expenses 26,250.00
Other Expenses 191,100.00
Loss on Sales of Equipment 7,175.00
Tax Expenses 16,975.00
241,500.00

Net Income 103,250.00

Computation for Net Income

Retain Earning (Ending) 181,650.00


Less:Retain Earning (Begining) - 165,375.00
16,275.00
Add: Cash Dividend 86,975.00

Net Income 103,250.00

Additional Information:
1. Loss on sale on equipment
2. Equipment costing 65,625 with accumulated depriciation of 39,375 is sold for
3. Equipment costing 134,925 is purchased by paying cash 35,000 and signing the long
term note for balance.
4. Borrowed 5,250 by signing a short term note.
5. Paid 43,925 to reduce long term note payable.
6. Issued 3,500 common shares for cash at Rs 18 per share.
7. Declared and paid cash dividend of 86,975

Required: prepare operating, investing and financing activity both direct and indirect method.
Cassh Flow Statement (Direct Method)

Cash Flow from Operaing Activity:


Cash Collected from Customers:
Sales 694,750.00
Less: Increase in Accounts Receivable - 21,525.00
Cash Collected from Customers: 673,225.00

Cash Paid to Suppliers:


Cost of Goods Sold (COGS) - 350,000.00
Less: Decrease in Accounts Payable - 39,900.00
Less: Increase in Inventory - 29,750.00
Cash Paid to Suppliers: - 419,650.00

Cash Paid for Operations:


Other Expenses - 191,100.00
Increase in S.T.N. Payables 5,250.00
Decrease in Prepaid Rent 1,225.00
Cash Paid for Operations - 184,625.00

Cash Paid for Taxes: - 16,975.00

Cash Generates from Operating Activities 51,975.00

Income Statement

Sales 694,750.00
less: Cost of Goods Sold - 350,000.00
Gross Profit 344,750.00

Less: Operating Expenses:


Depreciation Expenses 26,250.00
Other Expenses 191,100.00
Loss on Sales of Equipment 7,175.00
Tax Expenses 16,975.00
241,500.00

Net Income 103,250.00

Computation for Net Income

Retain Earning (Ending) 181,650.00


Less:Retain Earning (Begining) - 165,375.00
16,275.00
Add: Cash Dividend 86,975.00

Net Income 103,250.00

7,175.00
19,075.00
35,000.00

5,250.00
43,925.00
63,000.00
86,975.00

direct method.
Cassh Flow Statement (Indirect Method)

Cash Flow from Operaing Activity:


Net income 10,000.00
Loss on sales of equipment 1,000.00
11,000.00
add: Depreciation Expense 2,000.00
Net Income on Cash Basis 13,000.00

∆ in Working Capital
Decrease in Accounts Receivable 2,000.00
Increase in Inventory - 400.00
Increase in Accounts Payable 1,800.00
Income tax paid - 200.00
3,200.00
Cash Generates from Operating Activities 16,200.00

Cash Flow from Investing Activity:


Sales of Equipment 4,500.00
Purchase of Equipment - 6,000.00
Cash Consumed by Investing Activities - 1,500.00

Cash Flow from Financing Activity:


Cash Dividend - 6,100.00
Cash Consumed by Financing Activities - 6,100.00

Net Increase In Cash 8,600.00

Balance Sheet
Net Change 2012 2011
Assets
Cash 8,600.00 45,400.00 36,800.00
Account Receivable - 2,000.00 11,000.00 13,000.00
Inventory 400.00 2,000.00 1,600.00
Equipment 2,000.00 17,000.00 15,000.00
Accumulated Depreciation - 1,500.00 - 3,500.00 - 2,000.00
TOTAL ASSETS 7,500.00 71,900.00 64,400.00

Equities
Account Payble 1,800.00 5,800.00 4,000.00
Dividend Pay - 1,600.00 1,500.00 3,100.00
Income Tax Pay - 200.00 1,000.00 1,200.00
Share Capital 2,000.00 12,000.00 10,000.00
Retain Earning 5,500.00 51,600.00 46,100.00
TOTAL EQUITIES 7,500.00 71,900.00 64,400.00

Income Statement

Sales 54,000.00
less: Cost of Goods Sold - 13,500.00
Gross Profit 40,500.00

Less: Operating Expenses:


Depreciation Expenses 2,000.00
Other Expenses 25,000.00
27,000.00
13,500.00
Loss on Sale on Equipment 1,000.00
12,500.00
Less: Tax Expenses 2,500.00

Net Income 10,000.00

Computation for Net Income

Retain Earning (Ending) 51,600.00


Less:Retain Earning (Begining) - 46,100.00
5,500.00
Add: Cash Dividend 4,500.00

Net Income 10,000.00

Additional Information:
1. Equipment for purchased for cash 6,000
2. Equipment with an accumulated depriciation of Rs 500 costing Rs 4,000 was sold
3.Dividend was declared and paid.

Required: Prepare cash flow from both direct and indirect method.
Cassh Flow Statement (Direct Method)

Cash Flow from Operaing Activity:


Cash Collected from Customers:
Sales 54,000.00
Add: Decrease in Accounts Receivable 2,000.00
Cash Collected from Customers: 56,000.00

Cash Paid to Suppliers:


Cost of Goods Sold (COGS) - 13,500.00
Add: Increase in Accounts Payable 1,800.00
Less: Increase in Inventory - 400.00
Cash Paid to Suppliers: - 12,100.00

Cash Paid for Operations:


Other Expenses - 25,000.00
Cash Paid for Operations - 25,000.00

Cash Paid for Taxes: (2500 I.S.+200 ∆ B.S.) - 2,700.00

Cash Generates from Operating Activities 16,200.00


-

Income Statement

Sales 54,000.00
less: Cost of Goods Sold - 13,500.00
Gross Profit 40,500.00

Less: Operating Expenses:


Depreciation Expenses 2,000.00
Other Expenses 25,000.00
27,000.00
13,500.00
Loss on Sale on Equipment 1,000.00
12,500.00
Less: Tax Expenses 2,500.00

Net Income 10,000.00

Computation for Net Income


Retain Earning (Ending) 51,600.00
Less:Retain Earning (Begining) - 46,100.00
5,500.00
Add: Cash Dividend 4,500.00

Net Income 10,000.00

6,000.00
4,000.00
1,600.00
Cassh Flow Statement (Indirect Method)

Cash Flow from Operaing Activity:


Net income 112,660.00
Gain on sale of equipment - 5,000.00
107,660.00
add: Depreciation Expense 30,500.00
Net Income on Cash Basis 138,160.00

∆ in Working Capital
Increase in Accounts Receivable - 23,800.00
Increase in Inventory - 24,250.00
Decrease in Accrued Expense - 3,730.00
Increase in Accounts Payable 9,420.00
- 42,360.00
Cash Generates from Operating Activities 95,800.00

Cash Flow from Investing Activity:


Sales of Investment 27,500.00
Sales of Plant 15,000.00
Purchase of Equipment - 146,000.00
Cash Consumed by Investing Activities - 103,500.00

Cash Flow from Financing Activity:


Cash Dividend - 48,000.00
Common stock 50,000.00
Increase in Bond Payable 75,000.00
Cash Generates from Financing Activities 77,000.00

Net Increase In Cash 69,300.00

Balance Sheet
Net Change 2016 2015
Assets
Cash 69,300.00 102,700.00 33,400.00
Account Receivable 23,800.00 60,800.00 37,000.00
Inventory 24,250.00 126,900.00 102,650.00
Investment - 27,500.00 79,500.00 107,000.00
Plant Assets 110,000.00 315,000.00 205,000.00
Accumulated Depreciation - 4,500.00 - 44,500.00 - 40,000.00
TOTAL ASSETS 195,350.00 640,400.00 445,050.00

Equities
Account Payble 9,420.00 57,700.00 48,280.00
Accrued Expense - 3,730.00 15,100.00 18,830.00
Bonds Payable 75,000.00 145,000.00 70,000.00
Common stock 50,000.00 250,000.00 200,000.00
Retain Earning 64,660.00 172,600.00 107,940.00
TOTAL EQUITIES 195,350.00 640,400.00 445,050.00

Additional Information:
1. Plant costing 146,000 was purchased for cash.
2. Investment was sold at cost
3. Plant asset costing 36,000 sold for 15,000 resulting in a gain for Rs. 5,000
4. Cash dividend 48,000 was paid
Cassh Flow Statement (Direct Method)

Cash Flow from Operaing Activity:


Cash Collected from Customers:
Sales 297,500.00
Less: Increase in Accounts Receivable - 23,800.00
Cash Collected from Customers: 273,700.00

Cash Paid to Suppliers:


Cost of Goods Sold (COGS) - 99,460.00
Add: Increase in Accounts Payable 9,420.00
Less: Increase in Inventory - 24,250.00
Cash Paid to Suppliers: - 114,290.00

Cash Paid for Operations:


Decrease in Accrued Expense - 3,730.00
Operating Expenses - 19,670.00
Interest Expense - 2,940.00
Cash Paid for Operations - 26,340.00

Cash Paid for Taxes: - 37,270.00

Cash Generates from Operating Activities 95,800.00

Income Statement

Sales 297,500.00
Gain on sale of Plant 5,000.00
Total Income 302,500.00

Less:
Cost of Goods Sold 99,460.00
Opeating Expenses 19,670.00
Depreciation Expenses 30,500.00
Income Tax 37,270.00
Interest Expense 2,940.00
189,840.00

Net Income 112,660.00

Computation for Net Income


Retain Earning (Ending) 172,600.00
Less:Retain Earning (Begining) - 107,940.00
64,660.00
Add: Cash Dividend 48,000.00

Net Income 112,660.00


Balance Sheet
Net Change 2016 2015
Assets
Cash 69,300.00 102,700.00 33,400.00
Account Receivable 23,800.00 60,800.00 37,000.00
Inventory 24,250.00 126,900.00 102,650.00
Investment - 27,500.00 79,500.00 107,000.00
Plant Assets 110,000.00 315,000.00 205,000.00
Accumulated Depreciation - 4,500.00 - 44,500.00 - 40,000.00
TOTAL ASSETS 195,350.00 640,400.00 445,050.00

Equities
Account Payble 9,420.00 57,700.00 48,280.00
Accrued Expense - 3,730.00 15,100.00 18,830.00
Bonds Payable 75,000.00 145,000.00 70,000.00
Common stock 50,000.00 250,000.00 200,000.00
Retain Earning 64,660.00 172,600.00 107,940.00
TOTAL EQUITIES 195,350.00 640,400.00 445,050.00

Additional Information:
1. Plant costing 146,000 was purchased for cash.
2. Investment was sold at cost
3. Plant asset costing 36,000 sold for 15,000 resulting in a gain for Rs. 5,000
4. Cash dividend 48,000 was paid
Income Statement

Sales 297,500.00
Gain on sale of Plant 5,000.00
Total Income 302,500.00

Less:
Cost of Goods Sold 99,460.00
Opeating Expenses 19,670.00
Depreciation Expenses 30,500.00
Income Tax 37,270.00
Interest Expense 2,940.00
189,840.00

Net Income 112,660.00

Computation for Net Income

Retain Earning (Ending) 172,600.00


Less:Retain Earning (Begining) - 107,940.00
64,660.00
Add: Cash Dividend 48,000.00

Net Income 112,660.00


Balance Sheet
Net Change 2005 2004
Assets
Cash - 31,850.00 75,425.00 107,275.00
Account Receivable 21,525.00 91,000.00 69,475.00
Inventory 29,750.00 383,250.00 353,500.00
Prepaid Rent - 1,225.00 7,525.00 8,750.00
Equipment 69,300.00 223,300.00 154,000.00
Accumulated Depreciation 13,125.00 - 48,475.00 - 61,600.00
TOTAL ASSETS 100,625.00 732,025.00 631,400.00

Equities
Account Payble - 39,900.00 123,375.00 163,275.00
Short Term Note Payable 5,250.00 14,000.00 8,750.00
Long Term Note Payable 56,000.00 131,250.00 75,250.00
Share Capital 63,000.00 281,750.00 218,750.00
Retain Earning 16,275.00 181,650.00 165,375.00
TOTAL EQUITIES 100,625.00 732,025.00 631,400.00

Additional Information:
1. Loss on sale on equipment
2. Equipment costing 65,625 with accumulated depriciation of 39,375 is sold for
3. Equipment costing 134,925 is purchased by paying cash 35,000 and signing the long
term note for balance.
4. Borrowed 5,250 by signing a short term note.
5. Paid 43,925 to reduce long term note payable.
6. Issued 3,500 common shares for cash at Rs 18 per share.
7. Declared and paid cash dividend of 86,975
Income Statement

Sales 694,750.00
less: Cost of Goods Sold - 350,000.00
Gross Profit 344,750.00

Less: Operating Expenses:


Depreciation Expenses 26,250.00
Other Expenses 191,100.00
Loss on Sales of Equipment 7,175.00
Tax Expenses 16,975.00
241,500.00

Net Income 103,250.00

Computation for Net Income

Retain Earning (Ending) 181,650.00


Less:Retain Earning (Begining) - 165,375.00
16,275.00
7,175.00 Add: Cash Dividend 86,975.00
19,075.00
35,000.00 Net Income 103,250.00

5,250.00
43,925.00
63,000.00
86,975.00
Balance Sheet
Net Change 2012 2011
Assets
Cash 8,600.00 45,400.00 36,800.00
Account Receivable - 2,000.00 11,000.00 13,000.00
Inventory 400.00 2,000.00 1,600.00
Equipment 2,000.00 17,000.00 15,000.00
Accumulated Depreciation - 1,500.00 - 3,500.00 - 2,000.00
TOTAL ASSETS 7,500.00 71,900.00 64,400.00

Equities
Account Payble 1,800.00 5,800.00 4,000.00
Dividend Pay - 1,600.00 1,500.00 3,100.00
Income Tax Pay - 200.00 1,000.00 1,200.00
Share Capital 2,000.00 12,000.00 10,000.00
Retain Earning 5,500.00 51,600.00 46,100.00
TOTAL EQUITIES 7,500.00 71,900.00 64,400.00

Additional Information:
1. Equipment for purchased for cash 6,000
2. Equipment with an accumulated depriciation of Rs 500 costing Rs 4,000 was sold
3.Dividend was declared and paid.
Income Statement

Sales 54,000.00
less: Cost of Goods Sold - 13,500.00
Gross Profit 40,500.00

Less: Operating Expenses:


Depreciation Expenses 2,000.00
Other Expenses 25,000.00
27,000.00
13,500.00
Loss on Sale on Equipment 1,000.00
12,500.00
Less: Tax Expenses 2,500.00

Net Income 10,000.00

Computation for Net Income

6,000.00 Retain Earning (Ending) 51,600.00


4,000.00 Less:Retain Earning (Begining) - 46,100.00
1,600.00 5,500.00
Add: Cash Dividend 1,600.00

Net Income 7,100.00

9,600.00 tax exp


10,000.00 inv

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