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CASH FLOW Problems

The document presents two problems requiring the preparation of cash flow statements for ABC Company Limited and Y Corporation based on their comparative balance sheets and additional financial information. Problem #01 includes details such as net income, asset sales, and dividends for ABC Company, while Problem #02 provides a comprehensive balance sheet and income statement for Y Corporation. Both problems require the application of cash flow statement principles to analyze the financial activities of the companies.

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Sohair Shahzad
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3 views

CASH FLOW Problems

The document presents two problems requiring the preparation of cash flow statements for ABC Company Limited and Y Corporation based on their comparative balance sheets and additional financial information. Problem #01 includes details such as net income, asset sales, and dividends for ABC Company, while Problem #02 provides a comprehensive balance sheet and income statement for Y Corporation. Both problems require the application of cash flow statement principles to analyze the financial activities of the companies.

Uploaded by

Sohair Shahzad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CASH FLOW STATEMENT

Problem # 01:
The comparative balance sheet of ABC COMPANY LIMITED at the end of 2007 and 2008 are
as follows:
Assets Equities
2007 2008 2007 2008
Rs. Rs. Rs. Rs.
Cash 80,000 88,800 Current liabilities 60,000 64,000
Accounts receivables 20,000 41,400 Bonds payable 44,000 44,000
Mer. Inventory 30,000 30,000 Discount on bonds (4,000) (3,600)
Land 8,000 8,000 Share capital 70,000 87,000
Cottage 40,000 32,000 Retained earnings 30,000 39,000
Equipment 30,000 34,000
All. for depreciation (10,000) (5,600)

FROM THE DESK OF: M. ZEESHAN MUMTAZ


Patients 2,000 1,800
200,000 230,400 200,000 230,400
Additional Information:
 Net income for the period Rs. 20,000.
 A cottage that cost Rs. 8,000 end which had a book value of Rs. 2,000 was sold for Rs. 2,800.
 The depreciation charge for the period was Rs. 1,600.
 There was an issue of ordinary shares of Rs. 10,000.
 Cash dividend of Rs. 4,000.
 Bonus shares were declared Rs. 7,000.
Required:
 A cash flow statement

Problem # 02:
Following are the comprehensive Balance Sheet of Y Corporation at December 31st, are as
follows:
Assets 2001 2002 Liabilities 2001 2002
Cash & cash equivalents 5,000 3,000 Accounts payable 5,000 8,000
Accounts receivables 15,000 22,000 Notes payable 20,000 -----
Inventory 12,000 15,000 Accrued wages 2,000 2,000
Fixed assets (net) 50,000 55,000 Accrued taxes 3,000 5,000
Other assets 8,000 5,000 Long-term debts ----- 15,000
Common stock 20,000 26,000
Retained earnings 40,000 44,000
90,000 100,000 90,000 100,000
Statement of Income and Retained Earnings
For the year ended December 31st, 2002
Net sales 48,000
Less: Expenses:
Cost of goods sold 25,000
Selling general and administrative expenses 5,000
Depreciation 5,000
Interest 2,000_ (37,000)
Net income before tax 11,000
Less: Income taxes (4,000)
Net income 7,000
Add: Retained earnings at December 31st, 2001 40,000
47,000
Less: Dividend (3,000)
Retained earnings at December 31st, 2002 44,000

FROM THE DESK OF: M. ZEESHAN MUMTAZ


Required:
 Prepare a cash flow statement using direct method for the year ended December 31st,
2002.

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