BA114.

2 AY 2016-2017
Cash Flow Exercises

Problem 1
The statement of cash flows for Riker Company (prepared using the indirect method) follows. Consider
the following. Consider the following additional information:
a) Sales for the year totaled $812,350. Cost of goods sold was $500,000. Operating expenses were
$100,000. Interest expense was $23,000. Income tax expense was $40,430
b) Of the decrease in accounts payable, 80% is related to inventory purchases; the remaining 20%
related to operating expenses
c) Depreciation and amortization are period costs; they do not enter into the computation of cost of
goods sold.

Prepare the Operating Activities section of the statement of cash flows for Riker Company using the direct
method.
Problem 2
The following shows the comparative balance sheet and current year income statement for Ganda Ko Ay,
Ltd.

Additional information:
1. Equipment with a net book value of P7,500 and original cost of P10,500 was sold for P7,500
2. All sales are made on credit
3. The company received cash dividends from FVTPL investments amounting to P2,000, recorded as
investment income
4. The Company paid and declared dividends during the year.
5. Interest expense for the year 2017 was P2,000, which was fully paid during the year.
7. Composition of Gain from MTM Valuation are as follows:
Investments at Fair Value through Profit or Loss 300.00
Investment Properties 700.00

Prepare the statement of cash flow.

Problem 3
The following schedule shows the account balances of Beneficio Corporation at the beginning and end of
the fiscal year ended October 31, 2011

The following information was also available:

a) All purchases and sales were on account
b) Equipment with an original cost of $15,000 was sold for $7,000
c) Selling and general expenses include the following:
 Building depreciation……………………………………………………………3,750
 Equipment depreciation……………………………………………………….25,250
 Bad debt expense…………………………………………………………………4,000
 Interest expense…………………………………………………………………..18,000
d) A 6-month note payable for $50,000 was issued for the purchase of a new quipment
e) The long term note payable requires the payment of $20,000 per year plus interest until paid.
f) Treasury stock was sold for $1,000 more than its cost
g) During the year, a 30% stock dividend was declared and issued. At the time, there were 100,000
shares of $2 par common stock issued. However, 1,000 of these shares were held as treasury
stock at the time and were prohibited from participating in the stock dividend. Market price was
$10 per share after the stock dividend was issued.
h) Equipment was overhauled, extending its useful life at a cost of $6,000. The cost was debited to
Accumulated Depreciation – Equipment
i) Beneficio has determined that its purchases and sales of trading securities are operating activities

Prepare a statement of cash flows for the year ended October 31, 2011 using the indirect method of
reporting cash flows from operations.