ATB (Adjusted Trial Balance) Operating expenses XX 50 000

SCI Accrued expense, beg. XX 20 000

SFP Accrued expense, end (XX) (30 000)
SCE All amounts come from SCI & SFP; existence Prepaid expense, beg. (XX) (50 000)
SCF IAS 7 *separate/special coz challenging Prepaid expense, end XX 30 000
Depreciation (XX) (5 000)
STATEMENT OF CASH FLOWS (IAS 7) Cash payments for OPEX XX 15 000
CASH
1. Cash on hand- coins, bills Given:
2. Cash in bank- savings, checking, current Opex 50 000
3. Operational funds- petty cash fund AE, beg. 20 000 Salaries expense 10 000
4. Checks- if issued/received considered as cash AE, end 30 000 Salaries payable 10 000

CASH EQUIVALENTS Accrued expense √ expense × paid

-short- term highly liquid investments Prepaid expense × expense √ paid
-acquired three months BEFORE maturity
1. Treasury bills ERNST COMPANY
2. Money market Statement of Cash Flows
3. Time deposit For the year ended December 31
4. Certificate of deposit 2017 2016
Assets
CASH FLOW Cash 180 000 150 000
-inflows and outflows of cash and cash equivalents Accounts receivable 230 000 220 000
Inventory 90 000 75 000
NONCASH TRANSACTIONS Prepaid expenses 45 000 60 000
-opposite of cash transactions Total assets ₱ 545 000 ₱ 505 000

 Cash may be acquired thru debts; does not define the success of a particular business Liabilities
Accounts payable 130 000 110 000
 Cash receipt journal Accrued expenses 20 000 35 000
 Cash disbursement journal Total liabilities 150 000 145 000
 Sales journal
 Purchases journal Equity
Share capital 200 000 200 000
Cash, beg. xx Retained earnings 195 000 160 000
+ receipts xx Total equity 395 000 360 000
- disbursements (xx) Total liabilities and equity ₱ 545 000 ₱ 505 000
Cash, end xx
Sales P 315 000 Purchases* 215 000
SOURCES: A/R, beg. 220 000 AP, beg. 110 000
Operating activities- all cash flows related to main operations A/R, end. (230 000) AP, end (130 000)
Investing activities Cash receipts from Cash payments to
customers
₱ 305 000 suppliers
₱ 195 000
Financing activities

Operating expenses 80 000 Inventory, beg. 75 000

MAIN OPERATIONS:
Accrued expense, beg. 35 000 Purchases (squeeze) 215 000
1. Cash receipts from customers XX 480 000
Accrued expense, end (20 000) Available for sale 290 000
2. Cash payments to suppliers (XX) (180 000)
Prepaid expense, beg. (60 000) Inventory, end (90 000)
3. Cash payments for operating expenses (XX) Prepaid expense, end 45 000 COGS 200 000
4. Cash payments for interest (XX) Cash payments for OPEX ₱ 80 000
5. Cash payments for taxes (XX)
ERNST COMPANY
Statement of Cash Flows
Sales XX P 500 000 P 500 000 For the year ended December 31, 2017
A/R, beg. XX 30 000 50 000 Cash flows from operating activities
A/R, end. (XX) (50 000) (30 000) Cash receipts from customers ₱ 305 000
Cash receipts from customers XX P 480 000 P 520 000 Cash paid to suppliers (195 000)
*walang natanggap pero may sales **may natanggap from sales Cash paid for operating expenses ( 80 000)
Cash xx Cash 500 000 Cash 480 000 Net cash from operating activities ₱ 30 000
Sales xx Sales 500 000 A/R 120 000
A/R xx Cash 20 000 Sales 500 000 Operating activities +50 000
Sales xx A/R 20 000 Investing activities -30 000
Financing activities +10 000
Purchases XX 230 000 Net cash inflow(outflow) 30 000
Add: Cash, beginning 150 000
AP, beg. XX 200 000
=Cash, ending 180 000
AP, end (XX) (250 000)
Cash payments to suppliers XX 180 000
STATEMENT OF CASH FLOWS
1. Operating activities
COGS P 300 000 -direct method and indirect method
Given: Direct method:
Beginning inventory 150 000 Cash collections from customers XX 305 000
Ending inventory 80 000 Cash payments for suppliers (XX) (195 000)
AP, beg. 200 000 Cash payments for operating expenses (XX) (180 000)
AP, end 250 000 Payments for interest (XX) -
Solution: Payments for taxes (XX) -
Inventory, beg. 150 000 Cash inflow (outflow) from operating activities XX ₱ 30 000
Purchases (squeeze) 230 000 2. Investing activities
Available for sale 380 000 3. Financing activities
Inventory, end (80 000) 2017 2016
COGS 300 000 Cash 180 000 150 000 =30k
OPERATING EXPENSES Interest expense 70k Interest expense* XX 100 000 e.g.
 Administrative expense Cash 70k
Interest payable, beginning XX -
 Distribution/selling expense Interest expense 30k
Interest payable, ending (XX) 30 000
Interest payable 30k
Payments for interest XX ₱ 70 000
ACCRUED EXPENSES (liabilities)
 Salaries payable Income tax expense XX
 Rent payable Income tax payable, beg. XX
 Utilities payable Income tax payable, end. (XX)
 Other: all operating expense to be paid but inutang mo Payment for taxes XX
 Increase
Indirect method: Interest +O/I 370 000
Profit before tax XX 35 000 -O/F O I F
Adjustments for noncash items: Dividends +O/I 400K
Depreciation XX - -F/O
Impairment loss XX -
Gain on sale (XX) - AlP 280 000
Historical cost 300 000
Loss on sale XX - Cash 70 000
Accumulated depreciation (280 000)
Interest expense XX - Equipment 300 000
Carrying amount 20 000
Decrease (increase) in current assets: Gain on sale-residual 50 000
Accounts receivable XX/(XX) (10 000) Cash 200 000
Inventory XX/(XX) (15 000) Land 500 000 EQUITY METHOD- significant influence >20%
Prepaid expenses XX/(XX) (5 000)
Short- term investments XX/(XX) - Investment in associate 250 000
Investment in associate, beg. 920 000
Increase (decrease) in current liabilities: Investment income 250 000
Share in income(loss) 250 000
Accounts payable XX/(XX) 200 000 Dividends as received (180 000)
Accruals XX/(XX) (15 000) <20% investment (FV method)
Investment in associate, end. ₱ 990 000
Cash payments for interest - - Cash xx
Cash payments for taxes - - Dividend income xx
Cash inflow (outflow) from operating activities ₱ 30 000
Retained earnings, beg. 1 615 000 Overall effect: unhappy
Problem 2. Net income AFTER tax 490 000
because most cash (400k)
Sales P 536 000 Purchases* 434 000 Dividends (387 500)
Retained earnings, end. 1 717 500 came from N/P
A/R, beg. 96 000 AP, beg. 68 000
A/R, end. (138 000) AP, end (90 000)
Cash receipts from Cash payments to Sales P 3 450 000 Purchases* 1 365 000
₱ 494 000 ₱ 412 000
customers suppliers A/R, beg. 1 500 000 AP, beg. 850 000
A/R, end. (1 850 000) AP, end (1 000 000)
Operating expenses 96 000 Cash receipts from Cash payments to
Inventory, beg. 168 000 customers
₱ 3 100 000 suppliers
₱ 1 215 000
Accrued expense, beg. 20 000
Accrued expense, end (16 000) Purchases (squeeze) 434 000
Prepaid expense, beg. - Available for sale 602 000 Operating expenses 1 510 000
Inventory, end (206 000) Inventory, beg. 1 535 000
Prepaid expense, end - Accrued expense, beg. 150 000
COGS 396 000 Purchases (squeeze) 1 365 000
Depreciation (22 000) Accrued expense, end (252 000)
Available for sale 2 900 000
Cash payments for OPEX ₱ 78 000 Prepaid expense, beg. (130 000)
Inventory, end (1 700 000)
Prepaid expense, end 150 000
COGS 1 200 000
ATKIN CORPORATION Depreciation (400 000)
Statement of Cash Flows Cash payments for OPEX ₱ 1 028 000
For the year ended December 31, 2002
Interest expense 40 000 Income tax expense 210 000
Cash flows from operating activities
Interest payable, beg. 35 000 Income tax payable, beg. 35 000
Cash receipts from customers ₱ 494 000
Interest payable, end (28 000) Income tax payable, end (42 500)
Cash paid to suppliers (412 000)
Payment for interest ₱ 47 000 Payment for taxes ₱ 202 500
Cash paid for operating expenses ( 78 000)
Net cash from operating activities ₱ 4 000
Direct method:
Cash receipts from customers 3 100 000
INDIRECT METHOD:
Cash payments for suppliers (1 215 000)
Profit before tax ₱ 44 000
Cash payments for operating expenses (1 028 000)
Adjustments for noncash items:
Payments for interest (47 000)
Depreciation 22 000
Payments for taxes (202 500)
Decrease (increase) in current assets:
Cash payments for dividends 387 500
Accounts receivable (42 000)
Dividends received 180 000
Inventory (38 000)
Cash inflow (outflow) from operating activities ₱ 400 000
Increase (decrease) in current liabilities:
INDIRECT METHOD:
Accounts payable 22 000
Accruals (4 000)
Cash inflow (outflow) from operating activities Operating activities ₱ 857 000
₱ 4 000
Net income before tax 700 000
Adjustments for noncash items:
Depreciation 400 000
Problem 3. Refer to book
Gain on sale of equipment (50 000)
20x2 20x1
Expropriation loss 200 000
Cash 250 000 220 000
Income from associates (250 000)
30 000
Interest expense 40 000
Decrease (increase) in current assets:
Operating Investing Financing
Accounts receivable (350 000)
-CA; CL -cf involving NCA -cf involving NCL &
Inventories (165 000)
-payment for interest, taxes +300 000 issuance of shares
Prepayments (20 000)
-dividends 410 000 - 260 000
Increase (decrease) in current liabilities:
COVEY CORPORATION Accounts payable 150 000
Statement of Cash Flows Accrued operating expense 102 000
For the year ended December 31, 2002 Cash payments for interest (47 000)
Operating activities Cash payments for taxes (202 500)
Profit before tax ₱ 545 000 Cash payments for dividends (387 500)
Adjustments for noncash items: Dividends received 180 000
Depreciation 140 000 Net cash inflow(outflow)-operating activities 400 000
Gain on sale (100 000)
Decrease (increase) in current assets: Investing activities
Accounts receivable 28 400 Proceeds from sale of equipment 70 000
Inventories (42 000) Acquisition/purchase of equipment (900 000)
Increase (decrease) in current liabilities: Proceeds from expropriation 200 000
Accounts payable 78 000 Net cash inflow(outflow)-investing activities (1 630 000)
Dividends paid (240 000)
Net cash inflow(outflow)-operating activities 410 000 Financing activities
Investing activities Proceeds from issuance of shares 200 000
Proceeds from sale of investment 300 000 Proceeds from borrowing 400 000
Acquisition/purchase of equipment (560 000) Net cash inflow(outflow)-financing activities 600 000
Net cash inflow(outflow)-investing activities (260 000) Net cash inflow(outflow) ₱ 370 000
Financing activities Add: Cash, beg. 400 000
Retirement of bonds (400 000) Cash, end. ₱ 770 000
Proceeds from issuance of shares 280 000
Net cash inflow(outflow)-financing activities (120 000)
Net cash inflow(outflow) ₱ 30 000