PROBLEM SOLVING 2The profit or loss section of the statement of comprehensive income of ITS NOT OK TO BE OK Companyfor the year ended December 31, 2020 is reproduced below:SalesP 6,100,0003,700,000Cost of goods soldGross profitGain on sale of equipmentP2,400,000100,000Salaries expense-820,000Insurance expense-380,000Depreciation expense220,000Profit before interest and income taxP1,080,000Interest expense120,000P960,000Profit before income taxIncome tax expense288,000P672,000ProfitThe following information is also available:Decrease in accounts receivableP120,000Increase in inventory280,000Decrease in accounts payable160,000Increase in salaries payable100,000180,000Increase in prepaid insuranceDecrease in interest payable30,00018,000Increase in income tax payableRequired: Prepare ITS OK NOT TO BE OK Company's 2020 Statement of Cash Flows using the indirectmethod.

Cash flows statement is one of the financial statement of business, which shows all cash inflows and…

PROBLEM SOLVING 2 The profit or loss section of the statement of comprehensive income of ITS NOT OK TO BE OK Company for the year ended December 31, 2020 is reproduced below: Sales P 6,100,000 Cost of goods sold Gross profit Gain on sale of equipment Salaries expense 3,700,000 P2,400,000 100,000 -820,000 Insurance expense -380,000 Depreciation expense 220,000 Profit before interest and income tax P1,080,000 Interest expense 120,000 Profit before income tax P960,000 288,000 P672,000 Income tax expense Profit The following information is also available: Decrease in accounts receivable P120,000 Increase in inventory 280,000 160,000 Decrease in accounts payable Increase in salaries payable 100,000 180,000 Increase in prepaid insurance Decrease in interest payable Increase in income tax payable 30,000 18,000 equired: Prepare ITS OK NOT TO BE OK Company's 2020 Statement of Cash Flows using the indirect sethod.

PROBLEM SOLVING 2 The profit or loss section of the statement of comprehensive income of ITS NOT OK TO BE OK Company for the year ended December 31, 2020 is reproduced below: Sales P 6,100,000 Cost of goods sold Gross profit Gain on sale of equipment Salaries expense 3,700,000 P2,400,000 100,000 -820,000 Insurance expense -380,000 Depreciation expense 220,000 Profit before interest and income tax P1,080,000 Interest expense 120,000 Profit before income tax P960,000 288,000 P672,000 Income tax expense Profit The following information is also available: Decrease in accounts receivable P120,000 Increase in inventory 280,000 160,000 Decrease in accounts payable Increase in salaries payable 100,000 180,000 Increase in prepaid insurance Decrease in interest payable Increase in income tax payable 30,000 18,000 equired: Prepare ITS OK NOT TO BE OK Company's 2020 Statement of Cash Flows using the indirect sethod.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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