the following data are taken from the records of butt i. que for the year 2019. legal fees received from…

the following data are taken from the records of butt i. que for the year 2019. legal fees received from clients: ₱408,000 depreciation expense: 70,000 proceeds of bank loan: 504,000 cash purchase of land: 1,100,000 provision for bad debts: 18,000 additional investment of atty. que: 300,000 partial payment of bank loan: 200,000 commission income receivable: 23,000 research income received: 32,000 taxes and licenses payable: 7,240 operating expenses: 360,000 collection of accounts payable: 600,000 interest on bank loan paid: 94,000 proceeds from sale of equipment: 860,000 cash balance on january 1, 2019 is ₱200,000. required: prepare a statement of cash flows then determine the following: 1. net cash flow from operating activities 2. net cash flow from investing activities 3. net cash flow from financing activities 4. net increase/decrease in cash 5. cash balance on december 31, 2019

the following data are taken from the records of butt i. que for the year 2019. legal fees received from clients: ₱408,000 depreciation expense: 70,000 proceeds of bank loan: 504,000 cash purchase of land: 1,100,000 provision for bad debts: 18,000 additional investment of atty. que: 300,000 partial payment of bank loan: 200,000 commission income receivable: 23,000 research income received: 32,000 taxes and licenses payable: 7,240 operating expenses: 360,000 collection of accounts payable: 600,000 interest on bank loan paid: 94,000 proceeds from sale of equipment: 860,000 cash balance on january 1, 2019 is ₱200,000. required: prepare a statement of cash flows then determine the following: 1. net cash flow from operating activities 2. net cash flow from investing activities 3. net cash flow from financing activities 4. net increase/decrease in cash 5. cash balance on december 31, 2019

Answer

Explanation:

Step1: Calculate net cash flow from operating activities

Legal fees received from clients ($408,000) is an operating - cash inflow. Provision for bad debts is a non - cash item and not included. Commission income receivable ($23,000) is not a cash item. Taxes and licenses payable ($7,240) is a liability and not a cash flow for this purpose. Operating expenses ($360,000) is a cash outflow. Collection of accounts payable ($600,000) is a cash inflow. Interest on bank loan paid ($94,000) is a cash outflow. Net cash flow from operating activities = $408,000+600,000 - 360,000 - 94,000=$554,000

Step2: Calculate net cash flow from investing activities

Proceeds of bank loan ($504,000) is not an investing activity. Cash purchase of land ($1,100,000) is a cash outflow. Proceeds on sale of equipment ($860,000) is a cash inflow. Net cash flow from investing activities=$860,000 - 1,100,000=-$240,000

Step3: Calculate net cash flow from financing activities

Additional investment of Atty. Que ($300,000) is a cash inflow. Partial payment of bank loan ($200,000) is a cash outflow. Net cash flow from financing activities = $300,000 - 200,000 = $100,000

Step4: Calculate net increase/decrease in cash

Net increase/decrease in cash=Net cash flow from operating activities+Net cash flow from investing activities+Net cash flow from financing activities =$554,000+( - 240,000)+100,000=$414,000

Step5: Calculate cash balance on December 31, 2019

Cash balance on January 1, 2019 is $200,000. Cash balance on December 31, 2019 = Cash balance on January 1, 2019+Net increase in cash =$200,000 + 414,000=$614,000

Answer:

  1. $554,000
  2. -$240,000
  3. $100,000
  4. $414,000
  5. $614,000