The income statement of Kyonggi Inc. in Suwon, Korea, contains the following condensed information (currency unit in thousand Korean won, ₩ 000’s): KYONGGI INC. Income Statement Year Ended December 31, 2019 Sales ₩ 6,583,000 Cost of goods sold 3,427,000 Gross profit 3,156,000 Operating expenses 2,349,000 Profit from operations 807,000 Interest expense 124,000 Profit before income tax 683,000 Income tax expense 203,000 Profit ₩ 480,000 Kyonggi Inc. showed the following selected current asset and current liability balances on its year-on-year comparative statement of financial position on December 31, 2019: 2019 2018 Increase (Decrease) Cash ₩150,000 ₩ 30,000 ₩120,000 Accounts receivable 775,000 610,000 165,000 Merchandise inventory 834,000 867,000 (33,000) Accounts payable 521,000 501,000 20,000 Income tax payable 53,000 25,000 28,000 Additional information: The company uses a perpetual inventory system. Operating expenses include salaries expense of ₩1,000,000, depreciation expense of ₩300,000, amortization expense of ₩80,000, and a loss on the disposal of machinery of ₩24,000. Used machinery was sold for ₩270,000, at a loss of ₩24,000. New machinery was purchased during the year for ₩1,250,000. It was partially financed by a bank loan payable issued for ₩400,000. Dividends paid in 2019 totaled ₩100,000. Instructions: Prepare the statement of cash flows using the indirect method. Prepare the statement of cash flows using the direct method. Identify the similarities and differences between your answers in parts A and B.
The income statement of Kyonggi Inc. in Suwon, Korea, contains the following condensed information (currency unit in thousand Korean won, ₩ 000’s):
KYONGGI INC.
Income Statement
Year Ended December 31, 2019
Sales ₩ 6,583,000
Cost of goods sold 3,427,000
Gross profit 3,156,000
Operating expenses 2,349,000
Profit from operations 807,000
Interest expense 124,000
Profit before income tax 683,000 Income tax expense 203,000
Profit ₩ 480,000
Kyonggi Inc. showed the following selected current asset and current liability balances on its year-on-year comparative statement of financial position on December 31, 2019:
2019 2018 Increase (Decrease)
Cash ₩150,000 ₩ 30,000 ₩120,000
Merchandise inventory 834,000 867,000 (33,000)
Accounts payable 521,000 501,000 20,000
Income tax payable 53,000 25,000 28,000
Additional information:
- The company uses a perpetual inventory system.
- Operating expenses include salaries expense of ₩1,000,000,
depreciation expense of ₩300,000, amortization expense of ₩80,000, and a loss on the disposal of machinery of ₩24,000. - Used machinery was sold for ₩270,000, at a loss of ₩24,000.
- New machinery was purchased during the year for ₩1,250,000. It was partially financed by a bank loan payable issued for ₩400,000.
- Dividends paid in 2019 totaled ₩100,000.
Instructions:
- Prepare the statement of
cash flows using the indirect method. - Prepare the statement of cash flows using the direct method.
- Identify the similarities and differences between your answers in parts A and B.
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