Cash Flow Analysis

This is a 30-pt drill.
You have until 11:59 PM (June 30,2023) to make and submit

your answers.
Instructions: Show your solutions in good form. Double rule and encircle all
final answers. Place all your answers on a separate sheet of yellow paper. Scan
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Filename: Surname, First name
Problem 1:
Debbie Corporation provides the following date:
2006 2005
Cash 300,000 200,000
Accounts receivable, net 840,000 580,000
Merchandise inventory 660,000 420,000
Prepaid expenses 100,000 50,000
Long term investment 80,000 -
Property, plant and equipment 1,130,000 600,000
Accumulated depreciation 110,000 50,000
Accounts payable 530,000 440,000
Accrued expenses 140,000 130,000
Dividends payable 70,000 -
Note payable – long term debt 500,000 -
Commons stock 1,200,000 900,000
Retained earnings 560,000 330,000
Net credit sales 6,400,000 4,000,000
Cost of goods sold 5,000,000 3,200,000
Expenses 1,000,000 520,000
Net income 400,000 280,000
All accounts receivable and accounts payable relate to trade merchandise.

Accounts payable are recorded net and always paid to take all of the discounts
allowed. The allowance for doubtful accounts at the end of 2006 was the same
as at the end of 2005. No receivables were charged against the allowance during
2006. The proceeds from the note payable were used to finance a new store
building. Common stock was sold to provide additional working capital.
1. Cash collections in 2006 from customers amounted to

a. 5,560,000
b. 5,850,000
c. 6,140,000
d. 6,400,000
2. Cash payments to merchandise creditors in 2006 amounted to

a. 4,670,000
b. 4,910,000
c. 5,000,000
d. 5,150,000
3. Net cash used in investing activities during 2006 was

a. 80,000
b. 530,000
c. 610,000
d. 660,000
Problem 2:
Dice Company’s balance sheet accounts as of December 31, 2006 and 2005 and
information relating to 2006 activities are presented below.
2006 2005
Assets
Cash 460,000 200,000
Trading securities 600,000 -
Accounts receivable (net) 1,020,000 1,020,000
Inventory 1,360,000 1,200,000
Long-term investments 400,000 600,000
Property, plant and equipment 3,400,000 2,000,000
Accumulated depreciation (900,0000) (900,000)
Patent 180,000 200,000
Total assets 6,520,000 4,320,000
Liabilities and Stockholders’ Equity

Accounts payable and accrued liabilities 1,650,000 1,440,000
Short-term debt 650,000 -
Common stock, P20 par 1,600,000 1,400,000
Additional paid-in capital 740,000 500,000
Retained earnings 1,880,000 980,000
Total liabilities and stockholders’ equity 6,520,000 4,320,000`
• Net income for 2006 was P1,380,000.

• Cash dividends of P480,000 were declared and paid in 2006.
• Equipment costing P800,000 and having a carrying amount of P300,000
was sold in 2006 for P300,000.
• A long-term investment was sold in 2006 for P270,000. There were no
other transactions affecting long-term investments in 2006.
• 10,000 shares of common stock were issued in 2006 for P44 a share.
• The trading securities were purchased for cash on December 31, 2006.
4. Net cash provided by operating activities was

a. 1,380,000
b. 1,830,000
c. 1,280,000
d. 1,900,000
5. Net cash used in investing activities was

a. 2,230,000
b. 1,790,000
c. 1,730,000
d. 1,630,000
6. Net cash provided by financing activities was

a. 610,00
b. 880,000
c. 910,000
d. 1,090,000
Problem 3:
Flax Company uses the direct method to prepare its cash flows statement. Flax’s
trial balance at December 31, 2006 and 2005, are as follows:
2006 2005
Cash 350,000 320,000
Accounts receivable 330,000 300,000
Inventory 310,000 470,000
Property, plant and equipment 1,000,000 950,000
Unamortized bond discount 45,000 50,000
Cost of goods sold 2,500,000 3,800,000
Selling expenses 1,415,000 1,720,000
General and administrative expenses 1,370,000 1,513,000
Interest expense 43,000 26,000
Income tax expense 204,000 612,000
7,567,000 9,761,000
Allowance for doubtful accounts 13,000 11,000
Accumulated depreciation 165,000 150,000
Trade accounts payable 250,000 175,000
Income tax payable 210,000 271,000
Deferred tax liability 53,000 46,000
8% callable bonds payable 450,000 200,000
Common stock 500,000 400,000
Additional paid-in capital 91,000 75,000
Retained earnings 447,000 646,000
Sales 5,388,000 7,787,000
7,567,000 9,761,000
• Flax purchased P50,000 in equipment during 2006.
• Flax allocated one-third of its depreciation expense to selling expenses and
the remainder to general and administrative expenses.
What amounts should Flax report in its cash flow statement for the year ended
December 31, 2006 for the following:
7. Cash collected from customers?

a. 5,418,000
b. 5,416,000
c. 5,360,000
d. 5,358,000
8. Cash paid for goods to be sold?

a. 2,585,000
b. 2,575,000
c. 2,425,000
d. 2,265,000
9. Cash paid for interest

a. 48,000
b. 43,000
c. 38,000
d. 17,000
10. Cash paid for income tax?

a. 258,000
b. 204,000
c. 197,000
d. 150,000
11. Cash paid for selling expenses?

a. 1,420,000
b. 1,415,000
c. 1,410,000
d. 1,400,000
Problem 4:
The differences in Beal Company’s balance sheet accounts at December 31,
2006 and 2005 are presented below:
Increase
Assets (Decrease)
Cash and cash equivalents 120,000
Short-term investments 300,000
Accounts receivable, net -
Inventory 80,000
Long-term investments (100,000)
Property, plant and equipment 700,000
Accumulated depreciation -
1,100,000
Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities (5,000)
Dividends payable 160,000
Short-term bank debt 325,000
Long-term debt 110,000
Common stock, P10 par 100,000
Additional paid-in capital 120,000
Retained earnings 290,000
1,100,000
The following additional information relates to 2006:
• Net income was P790,000.
• Cash dividend of P500,000 was declared.
• Equipment costing P600,000 and having a carrying amount of
P350,000 was sold for P350,000.
• Equipment costing P110,000 was acquired through issuance of long-
term debt.
• A long-term investment was sold for P135,000. There were no other
transactions affecting long-term investments.
• 10,000 shares of common stock were issued for P22 a share.
In Beal’s 2006 cash flow statement,
12. Net cash provided by operating activities was

a. 1,160,000
b. 1,040,000
c. 920,000
d. 705,000
13. Net cash used in investing activities was

a. 1,005,000
b. 1,190,000
c. 1,275,000
d. 1,600,000
14. Net cash provided by financing activities was

a. 20,000
b. 45,000
c. 150,000
d. 205,000
15. Significance of cash flow analysis.

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This is a 30-pt drill.

You have until 11:59 PM (June 30,2023) to make and submit

Filename: Surname, First name

All accounts receivable and accounts payable relate to trade merchandise.

1. Cash collections in 2006 from customers amounted to

2. Cash payments to merchandise creditors in 2006 amounted to

3. Net cash used in investing activities during 2006 was

Liabilities and Stockholders’ Equity

• Net income for 2006 was P1,380,000.

4. Net cash provided by operating activities was

5. Net cash used in investing activities was

6. Net cash provided by financing activities was

7. Cash collected from customers?

8. Cash paid for goods to be sold?

9. Cash paid for interest

10. Cash paid for income tax?

11. Cash paid for selling expenses?

In Beal’s 2006 cash flow statement,

12. Net cash provided by operating activities was

13. Net cash used in investing activities was

14. Net cash provided by financing activities was

15. Significance of cash flow analysis.

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