STATEMENT OF CASH FLOWS ACTIVITY
Top Company provided the following comparative statement of financial position.
ASSETS
Cash and Cash Equivalents
P 750,000
2022
2021
P 950,000
Accounts Receivable
1,750,000
1,100,000
Inventory
2,550,000
1,800,000
Prepaid Expenses
100,000
150,000
Property, Plant, and Equipment
5,300,000
4,300,000
Accumulated Depreciation
(1,150,000)
(800,000)
P9.300.000
P7.500.000
LIABILITIES AND EQUITY
Accounts Payable
P1,250,000
P1,000,000
Accrued Expenses
50,000
200,000
Share Capital
4,750,000
4,250,000
Retained Earnings
3,250,000
2,050,000
P9,300,000
P7.500.000
Additional Information
1. The statement of retained earnings for 2022 showed net income of P1,500,000
and cash dividend paid of P300,000
2. The increase in property, plant, and equipment is the result of equipment
purchased for cash.
3. The increase in share capital is the result of additional issuance of share capital
for cash.
4. The increase in accumulated depreciation is due to the additional depreciation
expense recorded in 2022.
Requirement:
A. Prepare the Statement of Cash Flows for Top Company following the indirect
method. 10 points
B. Provide the correct amounts for each major component of the Statement of Cash
Flow (Operating Activity, Investing Activity, Financing Activity, and Cash Ending
Balance). 5 points each
Note: Prepare your Statement of Cash Flows in good form.
