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Financial Analysis for Accountants

The statement of cash flows for Dela Rosa Company for the year ended December 31, 2020 shows that the company had net income of $430,000. Operating activities provided $1,222,000 in cash from adjustments including depreciation, loss on asset disposal, and changes in receivables, inventory, and payables. Investing activities used $480,000 in cash for equipment purchases and sales. Financing activities used $200,000 for dividend payments. As a result, the company's cash balance increased by $542,000 during the year.

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126 views2 pages

Financial Analysis for Accountants

The statement of cash flows for Dela Rosa Company for the year ended December 31, 2020 shows that the company had net income of $430,000. Operating activities provided $1,222,000 in cash from adjustments including depreciation, loss on asset disposal, and changes in receivables, inventory, and payables. Investing activities used $480,000 in cash for equipment purchases and sales. Financing activities used $200,000 for dividend payments. As a result, the company's cash balance increased by $542,000 during the year.

Uploaded by

Cla Joyce
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Dela Rosa Company

Company The income statement for the year ended December 31, 2020, for Dela Rosa Company
Company contains the following condensed information.

Required:

Prepare the statement of cash flows using (2 items x 10 points):

A. indirect method

DELA ROSA COMPANY

Statement of Cash Flows

For the Year Ended December 31, 2X20

Net Income P 430,000

Adjustment provided by operating activities:

Depreciation expense P 880,000

Loss on disposal of asset 24,000

Increase in account receivable (165,000)

Decrease in inventory 33,000

Increase in account payable 20,000 792,000

Net Cash provided by operating activities 1,222,000

Cash flows from investing activities:

Sale of equipment 270,000

Purchase of equipment (750,000)

Net cash used in investing activities (480,000)

Cash flows from financing activities:

Dividend paid (200,000)

Net cash provided by financing activities (200,000)

Net Increase in Cash 542,000

Add: Cash balance, beginning 130,000

Cash balance, end P 672,000


B. Direct method

DELA ROSA COMPANY

Statement of Cash Flow

For the Year Ended December 31, 2X20

Cash flows from operating activities

Cash receipts from the customers P 6,418,000

Cash payment to supplier P 2,757,000

Cash payment to operating supplier 2,086,000

Cash payment to Income tax 353,000 5,196,000

Net cash provided by operating activities 1,222,000

Cash flows from Investing activities

Sale of Equipment 270,000

Purchase of equipment (750,000)

Net cash provided by Investing activities (480,000)

Cash flows from financing activities:

Dividend paid (200,000)

Net cash provided by financing activities (200,000)

Net Increase in Cash 542,000

Add: Cash balance, beginning 130,000

Cash balance, end P 672,000

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